Question 1

The opportunity cost of something is:
A) larger during periods of rising prices.
B) equal to the monetary cost.
C) smaller during periods of falling prices.
D) what is given up to acquire it.

Accepted Answer

The opportunity cost of something is the value of the next best alternative that must be given up in order to pursue a certain action or decision. It is not equal to the monetary cost, and it does not change with changes in prices. Therefore, the best answer is D, which correctly defines opportunity cost.

Question 2

While buying refreshments for an upcoming party,you notice that a six-pack of Canadian Beer costs $2 and a six-pack of Bavarian Beer costs $4.You buy the six-pack of Bavarian Beer,although you wonder if maybe two six-packs of Canadian Beer would have been a better choice.The opportunity cost of the Bavarian Beer is:
A) $4.
B) the six-pack of Canadian Beer.
C) two six-packs of Canadian Beer.
D) $4 and the six-pack of Canadian Beer.

Accepted Answer

The answer of While buying refreshments for an upcoming party,you...

Question 3

Whenever a choice is made:
A) the cost of that choice is the opportunity cost.
B) the cost is easy to measure in dollar terms.
C) efficiency is improved.
D) scarcity is not a problem.

Accepted Answer

The cost of a choice is the opportunity cost, which is the value of the next best alternative that must be given up in order to pursue that choice. This is true regardless of whether the cost can be measured in monetary terms, and whether efficiency is improved or not. Scarcity is always a problem, as resources are limited and must be allocated among competing uses.

Question 4

The BEST measure of the opportunity cost of any choice is:
A) the monetary cost of that choice.
B) whatever you have given up to make that choice,even if no monetary costs are involved.
C) the cost associated with not taking full advantage of the opportunity offered by that choice.
D) your hourly wage.

Accepted Answer

Opportunity cost takes into account all the alternatives that you have to give up in order to make a certain choice, even if no monetary costs are involved. Therefore, the best measure of opportunity cost is whatever you have given up to make that choice.

Question 5

The university recently inherited a large mansion from a wealthy alumnus.The university plans to use the mansion for faculty parties and to house distinguished guests.The opportunity cost of the mansion to the university is:
A) zero because it was a gift.
B) the original cost of building the mansion.
C) the amount the university would receive if it sold the mansion.
D) the cost of catering the parties at the mansion.

Accepted Answer

The opportunity cost of the mansion is the value of the best alternative use of the resource, which in this case would be the amount the university could receive if it sold the mansion. By choosing to use the mansion for faculty parties and housing distinguished guests, the university is giving up the opportunity to sell it and potentially use the proceeds for other projects or investments. Therefore, the opportunity cost is the amount the university would receive if it sold the mansion.

Question 6

You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips would be:
A) $1 plus the enjoyment you would have received from the candy bar.
B) $2 minus the enjoyment you would have received from the bag of chips.
C) $1.
D) the enjoyment you would have received from the candy bar.

Accepted Answer

The answer of You have $1 to spend on a...

Question 7

A university student is faced with a difficult decision of how to spend 1 hour tonight.She could babysit her professor's child at an hourly wage of $7;she could work at the university library at a wage of $6;or she could finish her economics homework assignment.If she chooses to complete her homework assignment,she has incurred an opportunity cost equal to:
A) $7.
B) $6.
C) $13.
D) $0.

Accepted Answer

The answer of A university student is faced with a...

Question 8

Khalil is offered a free ticket to the opera which he cannot resell.His opportunity cost of going to the opera is:
A) zero-the tickets were free.
B) the price listed on the ticket.
C) whatever Khalil would have done had he not gone to the opera.
D) the price listed on the ticket and whatever Khalil would have done had he not gone to the opera.

Accepted Answer

Opportunity cost is the value of the next best alternative foregone, and in this case, since Khalil cannot resell the ticket, the option of not going to the opera and doing something else instead is the next best alternative. Therefore, the opportunity cost of going to the opera is whatever Khalil would have done had he not gone to the opera.

Question 9

A new startup airline is offering a free round-trip ticket to Hawaii to the first 600 people who enter the airline's main office on the airline's first day of business.You arrive 24 hours before it is scheduled to open to be sure to get the free ticket,and you buy food from vendors while waiting in line.You successfully obtain the ticket.What would be the cost to you for obtaining the ticket?
A) zero
B) the cost of food while you wait in line
C) the cost of food while you wait in line and the opportunity cost of your time spent in line
D) the actual value of the ticket

Accepted Answer

While the ticket itself is free, there is an opportunity cost to spending 24 hours waiting in line instead of doing other potentially productive or enjoyable activities. Additionally, the cost of food while waiting in line would also need to be taken into account.

Question 10

A friend comes up to you and offers you a free ticket to a Toronto Blue Jays game that night.You decide to attend the game.The game takes 5 hours and costs you $15 for transportation.If you had not attended the game,you would have worked at your part-time job for $8 an hour.What would be the cost to you of attending the game?
A) The cost is zero-the ticket is free.
B) $65
C) $40
D) $55

Accepted Answer

The cost of attending the game would be the opportunity cost of not working at your part-time job. Since the game took 5 hours, the opportunity cost of attending the game would be 5 hours multiplied by the $8 hourly wage, which equals $40. Adding the transportation cost of $15, the total cost of attending the game would be $55. Therefore, the correct answer is D.

Question 11

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt.See,there is always a cost to doing something.But if you don't do anything,then there is no cost." Your grandma does not understand the economic concept of:
A) scarcity.
B) efficiency.
C) opportunity cost.
D) marginal analysis.

Accepted Answer

The concept of opportunity cost states that when you choose to do one thing, you must forego the opportunity to do something else. In this case, the opportunity cost of not taking walks is potentially missing out on the physical and mental health benefits they provide. Your grandma is only considering the potential cost of taking walks (the risk of falling), but not the opportunity cost of not taking them.

Question 12

For an economist,the cost of something is:
A) the amount of money you paid for it.
B) what you gave up to get it.
C) always equal to its market value.
D) the quantity of resources used to produce it.

Accepted Answer

From an economist's perspective, cost is not just the monetary value of something, but rather what one has to give up in order to acquire it. This can include time, effort, or other resources that could have been used elsewhere. Therefore, the cost of something is equivalent to the opportunity cost of obtaining it.

Question 13

For a student who owns his or her own home and doesn't plan to live on campus,the cost of going to university is:
A) tuition and the cost of housing.
B) tuition,the cost of housing,and the cost of books and other school materials.
C) tuition,the cost of books and other school materials,and forgone income.
D) forgone income only.

Accepted Answer

The answer of For a student who owns his or...

Question 14

You can spend $100 on either a new economics textbook or a new tablet computer.If you choose to buy the new economics textbook,the opportunity cost is:
A) $100.
B) your enjoyment of the new tablet computer.
C) both the $100 and your enjoyment of the new tablet computer.
D) impossible to determine.

Accepted Answer

The opportunity cost of choosing to buy the economics textbook is the enjoyment you would have gotten from buying the new tablet computer. Therefore, if you value having the new tablet computer more than the new economics textbook, it would be a better choice to buy the tablet computer. Conversely, if you value the economics textbook more, it would be a better choice to buy that instead.

Question 15

Opportunity cost is:
A) about half of the monetary cost of a product.
B) the dollar payment for a product.
C) the benefit derived from a product.
D) the value of the best alternative forgone in making any choice.

Accepted Answer

Opportunity cost refers to the value of the best alternative forgone in making a choice. It is the cost of the next best alternative that must be given up in order to pursue a certain action. Therefore, in order to make the best choice, it is important to consider what alternative opportunities are being forgone and what their respective values are.

Question 16

Zoe's grandparents are excited about finally paying off their mortgage because,as they say,"Our cost of housing is now zero." Zoe should explain to them the economic concept of:
A) marginal analysis: if the additional cost of housing is zero,then their additional benefit is also zero.
B) opportunity cost: by living in the house,they are giving up the opportunity to sell the house,buy a smaller one,and pocket the difference.
C) efficiency: If their cost of housing is now zero,they should let Zoe move in without charging her any rent.Zoe is better off,and her grandparents aren't hurt.
D) equity: it is unfair that some people are still paying off their mortgage.

Accepted Answer

The concept of opportunity cost is relevant in this situation because by paying off their mortgage, Zoe's grandparents have eliminated the direct monetary cost of housing. However, they are still incurring an opportunity cost - the lost opportunity to sell their house, downsize, and potentially pocket the difference between the sale price and the cost of a smaller house. By understanding opportunity costs, Zoe can explain to her grandparents that even though their cost of housing is now zero, there may be other costs or trade-offs that they should consider.

Question 17

If the provincial government allocates additional spending on education programmes,the opportunity cost is:
A) zero.
B) the dollar amount of the additional spending.
C) considered only if taxes have to be raised to fund the spending.
D) measured in terms of the best alternative uses for that money.

Accepted Answer

The opportunity cost of the additional spending on education programs is measured in terms of the best alternative uses for that money. This means that if the government decides to spend more money on education, it will have to give up the opportunity to spend that money on something else, such as healthcare or infrastructure. Therefore, the opportunity cost is not zero, nor is it just the dollar amount of the additional spending. It is important to consider the trade-offs involved in allocating government funds.

Question 18

Margo spends $30 000 on 1 year's university tuition.The opportunity cost of spending 1 year in university for Margo is:
A) $30 000.
B) whatever she would have purchased with the $30 000 instead.
C) whatever she would have earned had she not been in university.
D) whatever she would have purchased with the $30 000 plus whatever she would have earned had she not been in university.

Accepted Answer

The answer of Margo spends $30 000 on 1 year's...

Question 19

A new fast-food restaurant offered a prize-a free meal (valued at $5)each week for a year-to its first 100 customers.Ramona camped out for 48 hours before the opening to be one of the first 100 customers,and she successfully obtained the prize.The cost to Ramona of obtaining the "free meal a week for a year" prize was:
A) zero.
B) $260.
C) whatever else she would have done with the 48 hours.
D) The cost is impossible to determine.

Accepted Answer

The cost to Ramona is the opportunity cost of whatever else she could have done with her time (48 hours) instead of camping out for the prize. This is an example of an opportunity cost, which is the value of the next best alternative foregone as the result of making a decision.

Question 20

The Taco Hut charges the same price for everything on its menu: $3 will buy a taco,a burrito,or nachos.You buy the taco and think that if you had not purchased the taco,you would have purchased the burrito.The opportunity cost of the taco is:
A) $3.
B) your enjoyment of the burrito.
C) $3 and your enjoyment of the burrito.
D) $3,your enjoyment of the burrito,and your enjoyment of the nachos.

Accepted Answer

The opportunity cost of the taco is the value of the next best alternative foregone, which in this case is the burrito. Therefore, the answer is B, your enjoyment of the burrito.

Quiz 1: First Principles

The opportunity cost of something is:

Whenever a choice is made:

The BEST measure of the opportunity cost of any choice is:

The university recently inherited a large mansion from a wealthy alumnus.The university plans to use the mansion for faculty parties and to house distinguished guests.The opportunity cost of the mansion to the university is:

You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips would be:

Khalil is offered a free ticket to the opera which he cannot resell.His opportunity cost of going to the opera is:

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt.See,there is always a cost to doing something.But if you don't do anything,then there is no cost." Your grandma does not understand the economic concept of:

For an economist,the cost of something is:

For a student who owns his or her own home and doesn't plan to live on campus,the cost of going to university is:

You can spend $100 on either a new economics textbook or a new tablet computer.If you choose to buy the new economics textbook,the opportunity cost is:

Opportunity cost is:

Zoe's grandparents are excited about finally paying off their mortgage because,as they say,"Our cost of housing is now zero." Zoe should explain to them the economic concept of:

If the provincial government allocates additional spending on education programmes,the opportunity cost is:

Margo spends $30 000 on 1 year's university tuition.The opportunity cost of spending 1 year in university for Margo is:

The Taco Hut charges the same price for everything on its menu: $3 will buy a taco,a burrito,or nachos.You buy the taco and think that if you had not purchased the taco,you would have purchased the burrito.The opportunity cost of the taco is: