Opportunity Cost and Specialization

Michele earned $20 helping a neighbor clean out his garage. She wants to buy a new movie, and she wants to buy a new dress. She does not have enough money to buy both.

Michele chooses to buy the movie. The dress she did not buy is her (a)   .

• opportunity cost

• price incentive

• specialization

• trade

How does specialization lead to trade? (Choose 2)

• Trade helps limit what people are able to spend or buy.

• People, businesses, and regions can buy goods and services they need or want.

• Trade limits what goods and services people, businesses, and regions can make.

• People, businesses, and regions are unable to make everything they need or want.

Which economic concept best completes the graphic organizer?

• opportunity cost

• price incentive

• specialization

• voluntary exchange

Which economic concept does this scenario best illustrate?

• opportunity cost

• price incentive

• productivity

• trade

Complete the cause and effect diagram. Match the causes to their correct effects using the options provided.

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• Producers make more of items in demand.

• What is the result of specialization?

• Productivity and standards of living go

• What is the result of scarcity?

• Buyers and sellers both benefit.

• What is the result of price incentives?

• People and businesses must make economic

• What is the result of voluntary exchange?

Farmers in Georgia grow a lot of peaches. Farmers in Virginia grow a lot of tobacco. These choices are examples of (a)  

• specialization
• voluntary exchange
• price incentives
• opportunity cost