Question 1

Which of the following is NOT part of the first big economic question?
A) What goods and services are produced?
B) How are goods and services produced?
C) For whom are goods and services produced?
D) Why do incentives affect only marginal costs?

Accepted Answer

The question of why incentives affect only marginal costs is not part of the first big economic question. The three main parts of the first big economic question are what goods and services are produced, how they are produced, and for whom they are produced.

Question 2

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
A) an hour of tennis given up.
B) an hour of sleep given up.
C) both the tennis given up and the sleep given up.
D) nothing because he is paying for his class.

Accepted Answer

The opportunity cost of attending his morning class for one hour is an hour of sleep given up because Joe prefers sleeping in the morning. The other options, such as giving up an hour of tennis or nothing because he is paying for his class, do not accurately reflect the true cost to Joe's preferences and lifestyle.

Question 3

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
A) income she gave up.
B) lunch she gave up.
C) sleep she gave up.
D) income, pleasure, and sleep she gave up.

Accepted Answer

The answer of Today,Julie attended her 12:30 Economics class.If she...

Question 4

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
A) the value of working and skiing.
B) the value of working or skiing, depending on which you would have done rather than go to Hawaii.
C) working, because you would be giving up a week's pay.
D) None of the above if you enjoy the time spent in Hawaii.

Accepted Answer

Opportunity cost is the value of the next best alternative foregone. If you choose Hawaii, the opportunity cost is the value of either working or skiing, depending on which you would have preferred if not going to Hawaii.

Question 5

Opportunity cost means the
A) accounting cost minus the marginal cost.
B) highest-valued alternative forgone.
C) accounting cost minus the marginal benefit.
D) monetary costs of an activity.

Accepted Answer

Opportunity cost is the highest-valued alternative that must be given up to engage in a certain activity. It is not related to accounting costs, marginal costs or monetary costs.

Question 6

The loss of the highest-valued alternative defines the concept of
A) marginal benefit.
B) scarcity.
C) entrepreneurship.
D) opportunity cost.

Accepted Answer

The loss of the highest-valued alternative is known as opportunity cost. It is the cost of the next best alternative forgone in order to pursue a certain action. Therefore, the best choice would be option D.

Question 7

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
A) working and doing fix-up projects.
B) working or doing fix-up projects, depending on which you would have done otherwise.
C) working, because you would be giving up dollars.
D) nothing because you will enjoy the trip to Florida.

Accepted Answer

The opportunity cost is the value of the next best alternative that you give up when making a choice. In this case, it's either working or doing fix-up projects, depending on which you would have chosen if you didn't go to Florida.

Question 8

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?
A) attending a movie
B) studying for an economics exam
C) answering his e-mail
D) attending a movie, studying for an economics exam, and answering his e-mail

Accepted Answer

The opportunity cost of an action is the value of the next best alternative foregone. Since attending a movie is John's second choice, it represents the opportunity cost of attending the concert.

Question 9

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
A) working out at the gym, having breakfast with friends, and sleeping late.
B) working out at the gym.
C) zero because you do not have to pay money to use the library.
D) not clear because not enough information is given.

Accepted Answer

The opportunity cost of an action is the value of the next best alternative that you give up. In this scenario, the next best alternative to going to the library is working out at the gym, making it the opportunity cost.

Question 10

Which of the following statements are correct?
I. The "highest-valued alternative given up to get something" is the opportunity cost.
II. Wealthy economies don't experience opportunity costs.
III. Scarcity creates opportunity costs.
A) I only
B) I and II
C) I and III
D) I, II, and III

Accepted Answer

Statement I is correct, as opportunity cost is defined as the alternative that must be given up in order to pursue a certain action. 
Statement II is incorrect, as even wealthy economies face scarcity and have to make trade-offs which involve opportunity costs. 
Statement III is correct, as scarcity means that resources are limited, thus forcing individuals and societies to choose between different alternatives, each with their own opportunity cost.

Question 11

According to economists,
A) market capitalism is the best system available and some government intervention and regulation can either help or harm the social interest.
B) market capitalism is the best system available and any government intervention and regulation will inevitably harm the social interest.
C) centrally planned socialism is the best system available since governments generally make decisions that are in social interest.
D) centrally planned socialism and pure market capitalism are equally capable of promoting social interest, but a mixed economy is an undesirable compromise between the two that will harm social interest.

Accepted Answer

Economists generally agree that market capitalism is the best system available, but some government intervention and regulation can either help or harm the social interest. A completely unregulated market may lead to negative externalities and market failures, while certain regulations and interventions can promote competition and protect consumers. A mixed economy, with a balance of government and market forces, is often seen as the most effective system.

Question 12

The opportunity cost of something you decide to get is
A) all the possible alternatives that you give up to get it.
B) the highest valued alternative you give up to get it.
C) the value of the item minus the cost you paid for it.
D) the amount of money you pay to get it.

Accepted Answer

The opportunity cost is the highest valued alternative you give up to get something. This means that you have to consider all the possible alternatives and choose the one that you value the most. Option B is correct as it specifically mentions the highest valued alternative.

Question 13

Because we face scarcity,every choice involves
A) money.
B) the question "what."
C) giving up something for nothing.
D) an opportunity cost.

Accepted Answer

Every choice involves an opportunity cost, which is the value of the next best alternative that must be given up in order to make a choice. Therefore, the best choice is one that has the highest value among all alternatives considering the opportunity cost.

Question 14

Opportunity cost is defined as the
A) total value of all the alternatives given up.
B) highest-valued alternative given up.
C) cost of not doing all of the things you would like to do.
D) lowest-valued alternative given up.

Accepted Answer

Opportunity cost is the highest-valued alternative given up when choosing one option over another. It is not the total value of all alternatives or the lowest-valued alternative given up. And while not being able to do everything you would like to do may be a consequence of opportunity cost, it is not the definition of it.

Question 15

The term used to emphasize that making choices in the face of scarcity involves a cost is
A) substitution cost.
B) opportunity cost.
C) utility cost.
D) accounting cost.

Accepted Answer

Opportunity cost is the cost of the next best alternative forgone when making a decision. It emphasizes the idea that making a choice involves giving up something else in exchange. This concept is important in economics because it forces decision-makers to weigh the benefits and costs of their choices, and to consider what they are giving up in order to pursue a particular course of action. Without considering opportunity cost, decision-makers may overlook important trade-offs and make choices that are not optimal.

Question 16

Fred and Ann are both given free tickets to see a movie.Both decide to see the same movie.We know that
A) both bear an opportunity cost of seeing the movie because they could have done other things instead of seeing the movie.
B) both bear the same opportunity cost of seeing the movie because they are doing the same thing.
C) it is not possible to calculate the opportunity cost of seeing the movie because the tickets were free.
D) the opportunity cost of seeing the movie is zero because the tickets were free.

Accepted Answer

The fact that Fred and Ann were given free tickets does not mean they did not have alternative uses for their time. They could have done other things instead of watching the movie, so both of them bear an opportunity cost.

Question 17

In economics we learn that
A) tradeoffs allow us to have more of everything we value.
B) tradeoffs allow us to avoid the problem of opportunity cost.
C) opportunity costs are all of the possible alternatives given up when we make a choice.
D) None of the above answers is correct.

Accepted Answer

Tradeoffs require us to make choices between different options, implying that we cannot have more of everything we value. Opportunity cost is the value of the next best alternative given up when making a choice, not all possible alternatives.

Question 18

The opportunity cost of any action is
A) all the possible alternatives given up.
B) the highest-valued alternative given up.
C) the benefit from the action minus the cost of the action.
D) the dollars the action cost.

Accepted Answer

The opportunity cost of any action is the highest-valued alternative given up. This is because when we make a decision, we are giving up the next best alternative. Therefore, the opportunity cost is the value of the best alternative forgone.

Question 19

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,you'd have scored 70 percent.What was the opportunity cost of your evening at the movies?
A) 10 percent off your grade
B) 60 percent
C) 70 percent
D) Zero

Accepted Answer

The opportunity cost of going to the movies was the 10% difference in the score between studying and not studying. Therefore, the answer is A) 10 percent off your grade.

Question 20

Opportunity cost is best defined as
A) how much money is paid for something.
B) how much money is paid for something, taking inflation into account.
C) the highest-valued alternative that is given up to get something.
D) all the alternatives that are given up to get something.

Accepted Answer

Opportunity cost refers to the value of the next best alternative that is foregone in order to pursue a particular action or decision. Therefore, the correct definition is C, where the opportunity cost is the highest-valued alternative that is given up to obtain something.

Quiz 1: What Is Economics

Which of the following is NOT part of the first big economic question?

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

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

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

Opportunity cost means the

The loss of the highest-valued alternative defines the concept of

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

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?

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

Which of the following statements are correct? I. The "highest-valued alternative given up to get something" is the opportunity cost. II. Wealthy economies don't experience opportunity costs. III. Scarcity creates opportunity costs.

According to economists,

The opportunity cost of something you decide to get is

Because we face scarcity,every choice involves

Opportunity cost is defined as the

The term used to emphasize that making choices in the face of scarcity involves a cost is

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

In economics we learn that

The opportunity cost of any action is

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,you'd have scored 70 percent.What was the opportunity cost of your evening at the movies?

Opportunity cost is best defined as