Question 1

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 is the value of the next best alternative foregone. Since Joe likes to sleep late in the mornings, the opportunity cost of attending a morning class is the hour of sleep he gives up.

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 opportunity cost is the value of the next best alternative foregone, which in this case is either working or skiing, depending on which you would have chosen if not going to Hawaii.

Question 3

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 of accepting the position at the Bureau of Labor Statistics is the highest valued alternative that you have given up, which in this case is the job at Ernst and Young that pays $42,000. The offer from Wal-Mart for $38,000 is not the highest valued alternative, so it is not considered in the opportunity cost calculation.

Question 4

The opportunity cost of attending college includes the cost of

Accepted Answer

The opportunity cost of attending college includes not only the cost of tuition, but also the highest valued alternative to attending college. This could include the wages you would have earned if you had chosen to work instead of attending college, as well as any other missed opportunities. Therefore, option C is the correct answer.

Question 5

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

The opportunity cost of playing football at graduation was the income he could have earned coaching which is $50,000 a year. 
The opportunity cost of making movies eight years later was the income he could have earned playing football which is $2 million a year. So the answer is D.

Question 6

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 had the opportunity to do something else with their time. Therefore, they both bear an opportunity cost of seeing the movie.

Question 7

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

Accepted Answer

Option A is not an opportunity cost because there is no trade-off involved. Mary's decision to buy a new car is based on her increased income and does not involve giving up anything else. Opportunity cost refers to the value of the next best alternative that is foregone as a result of making a particular choice. Options B, C, and D all involve trade-offs and represent examples of opportunity cost.

Question 8

The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, youʹd have scored 70 percent. What was the opportunity cost of your evening at the movies?

Accepted Answer

The opportunity cost of going to the movies instead of studying was a 10 percent reduction in score on the midterm exam.

Question 9

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 of attending the hockey match is the value of the next best alternative, which in this case is going to the symphony. Therefore, the answer is choice A.

Question 10

You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not go to work where you could have earned $750. In terms of dollars, 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 11

Opportunity cost is defined as the

Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up in order to pursue a certain action. Therefore, the highest-value alternative given up is the correct answer.

Question 12

You have the choice of going on vacation to Florida for one week, staying at work for the week, or spending the week doing fix-up projects around your house. If you decide to go to Florida, the opportunity cost of the trip is

Accepted Answer

The opportunity cost is the value of the next best alternative foregone. In this case, it's either working or doing fix-up projects, depending on which you would have chosen if not going to Florida.

Question 13

Today, Julie attended her 12:30 Economics class. If she hadnʹt gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julieʹs opportunity cost of going to class is the

Accepted Answer

Opportunity cost is the value of the best alternative forgone. In this case, Julie gave up going out to lunch with friends to attend her class. Hence, the lunch she gave up is her opportunity cost. Option B is not appropriate as there is no mention of Julie missing work. Option C is not appropriate as it includes components that are not relevant to the given scenario. Option D is not appropriate as there is no mention of Julie giving up sleep to attend the class.

Question 14

The opportunity cost of any action is

Accepted Answer

The opportunity cost is the value of the next best alternative that must be given up to undertake the action. Therefore, the best choice is option D, which refers to the highest-valued alternative given up.

Question 15

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

Since John ranked going to a concert as his first choice, the opportunity cost would be giving up his second best alternative, which is going to a movie. Therefore, the best choice for John would be to attend the movie.

Question 16

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

The opportunity cost is the value of the next best alternative that is forgone. In this case, it would be either Brand B or Brand C, depending on which one Misty values more as the next best option.

Question 17

The opportunity cost of something you decide to get is

Accepted Answer

Opportunity cost is the highest valued alternative you give up to get something. Option D correctly defines opportunity cost.

Question 18

Opportunity cost is best defined as

Accepted Answer

Opportunity cost is the highest-valued alternative that is given up to choose a particular option. Option A is a partial definition because it only mentions the alternatives given up, but does not specify the highest-valued one. Option C and D mention money, but opportunity cost is not always related to money, as it can also be related to time, effort, and other resources.

Question 19

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

The opportunity cost is the next best alternative foregone, which in this case is working out at the gym, as it is the second choice in the ranked list.

Question 20

Which of the following statements are correct?
I. The ʺhighest-valued alternative given up to get somethingʺ is the opportunity cost.
II. Wealthy economies donʹt experience opportunity costs.
III. Scarcity creates opportunity costs.

Accepted Answer

Statement I is correct, as opportunity cost is defined as the highest-valued alternative foregone. Statement II is incorrect, as all economies face scarcity and thus experience opportunity costs. Statement III is correct, as opportunity costs arise due to scarce resources and the need to make choices between alternative uses for those resources. So, only statement I and III are correct.

Quiz 1: What Is Economics