Vocab - Trade-offs, Opportunity Cost, and Cost-Benefit Analysis

Which statement best defines a trade-off in economic decision-making?

• Choosing one option and gaining everything

• Comparing prices across multiple stores

• Giving up one thing to obtain another

• Paying money for a preferred alternative

Opportunity cost is most accurately described as which of the following?

• The money spent on the chosen option

• The time required to make a decision

• The value of the next-best alternative forgone

• The total cost of all alternatives considered

You spend Saturday studying instead of going to the beach. What is the trade-off and the opportunity cost?

• Studying on Saturday or Going to Beach

• Trade-off

• Relaxation and sunshine forgone

• Opportunity cost

• Knowledge

• Something you gained

Which example shows opportunity cost in education?

• Buying textbooks for classes

• Wages forgone by not working full-time

• Learning new skills during lectures

• Paying tuition at the start of term

A person deposits $1,000 into a savings account. What is the opportunity cost?

• The interest earned over a year

• The convenience of online banking

• The fun you could have had spending it

• The bank fees charged each month

A bakery uses its oven to bake bread all day instead of more expensive cakes. What opportunity cost does the bakery face?

• Extra time spent on packaging bread

• Higher utility bills for running the oven

• Lost revenue from not baking higher-priced items

• Lower wages for part-time bakers

Which statement best explains cost-benefit analysis (CBA)?

• A law requiring budgets to be balanced

• A method that ignores non-monetary trade-offs

• A process that totales benefits and subtracts costs

• A chart comparing prices at different stores

According to cost-benefit analysis, when is a decision considered sound?

• When all costs are eliminated

• When it matches popular opinion

• When benefits outweigh the costs

• When it has no opportunity cost

Watching a 2-hour movie has which opportunity cost for a busy person?

• Time with friends after school

• Learning new film techniques

• Money spent on streaming fees

• Two hours lost that could have been used for sleep or exercise

On a Production Possibilities Frontier (PPF), a point inside the curve (like C) represents what?

• Inefficient production level

• Efficient use of resources

• Impossible combination

• Maximum potential output