Chapter 3 - OPPORTUNITY COST

• an opportunity cost equal to $95

• an opportunity cost equal to other goods she could have bought for $5

• no opportunity cost, as entrance to the party is free

• no opportunity cost, as she had no better way of using the time

Why might a government choose to increase spending on healthcare instead of spending on building new roads?

• The financial cost of building new roads is lower.

• The opportunity cost of building new roads is lower.

• The opportunity cost of spending on healthcare is lower.

• The social costs of healthcare are higher.

What is an opportunity cost for a consumer spending money on a holiday?

• the potential interest earned if the holiday money had been saved

• the price paid for an air ticket to the holiday destination

• the rubbish created during the holiday which affects the local community

• the satisfaction that the consumer gains from the holiday

Increasing output of one good reduces production of another good. Which economic concept does this change represent?

• average cost

• diseconomies of scale

• economies of scale

• opportunity cost

• the ability to increase his purchasing power

• the additional time travelling to and from work

• the increased hourly earnings of $7.50

• the ten hours of leisure time

A farmer sells land used for crops to a firm that will use the land for wind turbines to produce electric power. What is the opportunity cost of this decision by the farmer?

• the cost of installing wind turbines

• the loss of revenue from crops that grow on the land

• the profit made from selling the land

• the reduced cost of producing renewable energy

• $10,000

• $12,000

• $25,000

• $32,000

A farmer decides to grow potatoes instead of wheat. What is the opportunity cost of growing the potatoes?

• the output of wheat

• the price of seed potatoes

• the profit from growing potatoes

• the time spent preparing the potato field

• $25 billion

• $30 billion

• $35 billion

• $45 billion

• going to a cricket match

• watching the annual town parade

• visiting relatives

• losing his Saturday free time