When making a choice to do more of one activity, the highest-valued other choice society does not make is called _______ , and it is measured _______ .
A) opportunity cost; in terms of the money it costs
B) increasing cost; in terms of the amount of money spent doing so
C) constant cost; by the slope of the production possibilities curve at that level
D) opportunity cost; by the slope of the production possibilities curve at that level

Question

Quizplus · Accepted Answer

The highest-valued other choice society does not make is called opportunity cost, and it is measured by the slope of the production possibilities curve at that level. Therefore, the best choice is D, which correctly identifies the concept of opportunity cost and how it is measured. Choice A is incorrect because opportunity cost is not necessarily measured in terms of money. Choice B is incorrect because increasing cost refers to the fact that as more of a good is produced, the cost of producing each additional unit increases. Choice C is incorrect because constant cost refers to the fact that the resources used to produce a good can be easily shifted between the production of that good and other goods, without much change in the cost of production.

When Making a Choice to Do More of One Activity