Question 1

Suppose you plan to take summer courses. The cost of tuition and textbooks is $1,200, housing will cost you $400, and you'll spend $300 on food. If you decide not to take courses in the summer, you'll live in your parents' house for free and spend only $100 on food. Also, if you don't take courses in the summer, you'll work full time and could earn at least $5,000. You can still work part time while taking courses, but the most you can earn is $1,000. What is your opportunity cost of taking courses in the summer?

Accepted Answer

The opportunity cost of taking courses includes the tuition, textbooks, housing, and food costs, plus the foregone earnings from not working full time. This totals $1,200 (tuition and textbooks) + $400 (housing) + $300 (food) + $5,000 (foregone earnings) - $1,000 (part-time earnings) - $100 (food savings) = $5,800.

Question 2

You have the choice of going to Hawaii for a week, staying at work for the week, or spending the week skiing. If you decide to go to Hawaii, the opportunity cost is

Accepted Answer

The answer of You have the choice of going to...

Question 3

Joe likes to sleep late in the mornings and play tennis in the afternoons. The opportunity cost of Joe attending his morning class for one hour is

Accepted Answer

The opportunity cost of attending the morning class is the next best alternative foregone, which in this case is an hour of sleep.

Question 4

On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is

Accepted Answer

Since the opportunity cost of choosing the library is working out at the gym, the best choice would be to work out at the gym. This maximizes the benefit of the choice made while minimizing the opportunity cost.

Question 5

Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that

Accepted Answer

Even though the tickets were free, both Fred and Ann could have chosen to do something else instead of seeing the movie, such as reading a book or going for a hike. Therefore, both bear an opportunity cost of seeing the movie.

Question 6

You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not report to work where you could have earned $750. The opportunity cost of the vacation is

Accepted Answer

The opportunity cost of the vacation includes both the cost of the trip ($2,000) and the foregone earnings ($750), totaling $2,750.

Question 7

John has two hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his e- mail. What is the opportunity cost of attending the concert for John?

Accepted Answer

The opportunity cost of attending the concert is the value of the next best alternative, which is attending a movie. Therefore, the best choice for John would be to attend the movie.

Question 8

During the summer you have made the decision to attend summer school, which prevents you from working at your usual summer job in which you normally earn $6,000 for the summer. Your tuition cost is $3,000 and books and supplies cost $1,300. The opportunity cost of attending summer school is

Accepted Answer

The opportunity cost includes both the foregone earnings of $6,000 and the direct costs of tuition and supplies, totaling $10,300.

Question 9

After you graduate, you have decided to accept a position working at the Bureau of Labor Statistics for $45,000.00 a year. The two other offers you received were working for Wal- Mart for $38,000 and working for Ernst and Young consulting for $42,000. Of these two offers, you would have preferred the job at Ernst and Young. What is the opportunity cost of accepting the position at the Bureau of Labor Statistics?

Accepted Answer

The opportunity cost is the value of the next best alternative foregone, which in this case is the $42,000 you would have earned at Ernst and Young, as it was your preferred choice among the two other offers.

Question 10

The opportunity cost of attending college includes the cost of

Accepted Answer

The definition of opportunity cost is the value of the next best alternative forgone. Therefore, the opportunity cost of attending college would include not only the tuition and fees but also the potential income from any alternative employment or activity that could have been pursued instead. Therefore, the highest valued alternative to attending college plus the cost of tuition is the most accurate representation of the opportunity cost of attending college.

Question 11

Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later, though he could continue to play football at $2 million a year, he quits football to make movies for $3 million a year. His opportunity cost of playing football at graduation was and eight years later the opportunity cost of making movies was _ .

Accepted Answer

At graduation, the opportunity cost of playing football was the $50,000 he could have earned coaching. Eight years later, the opportunity cost of making movies was the $2 million he could have earned by continuing to play football.

Question 12

Today, Julie attended her 12:30 Economics class. If she hadn't gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julie's opportunity cost of going to class is the

Accepted Answer

Opportunity cost refers to the value of the next best alternative that must be given up in order to pursue a certain action. In this case, Julie's opportunity cost of going to class is the lunch she gave up with her friends. This is because going to class meant she couldn't go out to lunch with her friends at the same time. Her income and sleep are not relevant in this scenario as they are not directly impacted by her decision to attend class or not.

Question 13

From 8 to 11 p.m., Sam can either attend a basketball game, a hockey match or the symphony. Suppose that Sam decides to attend the hockey match and thinks to herself that if she did not go to the match she would go to the symphony. Then the opportunity cost of attending the hockey match is

Accepted Answer

The opportunity cost is the value of the next best alternative forgone. In this case, the next best alternative for Sam is attending the symphony. Therefore, the opportunity cost of attending the hockey game is going to the symphony. Going to the basketball game or the cost of the time (three hours) are not relevant to the decision between attending the hockey game and the symphony.

Question 14

Which of the following is NOT an example of an opportunity cost?

Accepted Answer

Option A does not involve a trade-off between two alternatives. It simply describes a situation where Mary can now afford to buy a new car and move into a bigger apartment because of her higher wage. The other options involve choosing between two alternatives and the opportunity cost of choosing one over the other.

Question 15

The term "opportunity cost" points out that

Accepted Answer

Opportunity cost refers to the cost of the next best alternative forgone when making a decision, meaning that any decision regarding the use of a resource, whether it be time or money, involves a trade-off between the benefits of the chosen option and the opportunities that must be given up. Therefore, the best choice is D.

Question 16

Jill, an economics student, has already spent 5 hours cleaning her room. In deciding whether or not to continue cleaning for another hour, she applies the economic principle(s) of

Accepted Answer

Jill is considering whether or not to continue cleaning for another hour, which is a decision made at the margin. By thinking in terms of marginal benefits and marginal costs, Jill can determine whether the additional hour of cleaning is worth the time and effort. Therefore, the economic principle applied in this scenario is choosing at the margin.

Question 17

Misty has the option of purchasing one of three products: Brand A, Brand B, or Brand C. Each costs ten dollars. If she decides that Brand A meets her needs best, then the opportunity cost of this decision is

Accepted Answer

Opportunity cost is the value of the best alternative forgone. If Misty chooses Brand A, then the opportunity cost is the value of the next highest-value alternative forgone, which is either Brand B or Brand C depending on which one she would have chosen otherwise. Therefore, the correct answer is B.

Question 18

By choosing to come to class, you know you are giving up the ability to watch television. In doing so, you are applying the concept of

Accepted Answer

The concept of giving up watching television to attend class can be attributed to opportunity cost, which is the value of the best alternative forgone when making a decision.

Question 19

During the next hour John can play basketball, watch television, or read a book. The opportunity cost of reading a book

Accepted Answer

The opportunity cost of an activity is the value of the next best alternative that is foregone. If John prefers playing basketball to watching television, then the opportunity cost of reading a book is the value of playing basketball.

Question 20

When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of

Accepted Answer

The concept being illustrated in this scenario is opportunity cost, which refers to the trade-off of using resources for one purpose instead of another. Choosing to use resources to build a dam means that those resources cannot be used to build a highway, and vice versa. This trade-off highlights the opportunity cost of the government's decision.

Quiz 1: What Is Economics