Question 1

The opportunity cost of something you decide to get is

Accepted Answer

The opportunity cost is the highest valued alternative that is given up. Option A is close, but it is important to remember that it is not all possible alternatives, but only the ones that hold the most value. Options C and D do not accurately reflect the concept of opportunity cost.

Question 2

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

Accepted Answer

Opportunity cost is the cost of the next best alternative forgone. It helps to determine the true cost of a decision and the value of the foregone alternative. Therefore, understanding this concept is important in making rational decisions in the face of scarcity.

Question 3

The opportunity cost of any action is

Accepted Answer

The opportunity cost is the highest-valued alternative that must be given up in order to pursue a certain action. This means that it is not just any alternative, but the alternative that has the highest value or benefit. Therefore, the correct answer is B - the highest-valued alternative given up.

Question 4

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

Joe's opportunity cost of attending his morning class is the next best alternative foregone, which is an hour of sleep. He values his sleep more than attending the class. attending the class would mean giving up an hour of sleep, which he prefers over attending the class. Therefore, the best choice is not attending the morning class to sleep.

Question 5

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. So, if you choose to go to Hawaii, the opportunity cost is the value of the activity (working or skiing) that you would have chosen instead if you hadn't gone to Hawaii.

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

Both Fred and Ann have an opportunity cost of seeing the movie because they could have chosen to do other things instead of seeing the movie, even though they received free tickets.

Question 7

Opportunity cost is best defined as

Accepted Answer

Opportunity cost refers to the value of the alternative that is forgone in order to pursue a certain action. Therefore, the highest-valued alternative that is given up to get something is the most accurate definition of opportunity cost. Option A and B only focus on the monetary aspect, while option D includes all alternatives, not just the highest-valued one.

Question 8

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

Accepted Answer

The first big economic question pertains to the allocation of resources and includes what goods and services are produced, how they are produced, and for whom they are produced. The concept of incentives affecting marginal costs is a microeconomic concept and not directly related to the first big economic question.

Question 9

Because we face scarcity, every choice involves

Accepted Answer

Every choice involves an opportunity cost because we must give up something in order to choose something else. The opportunity cost is the value of the next best alternative that we had to forego in order to make our choice.

Question 10

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 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 11

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 of an action is the value of the next best alternative forgone. Since working out at the gym is the second choice after going to the library, it represents the opportunity cost.

Question 12

According to economists

Accepted Answer

While economists generally believe that market capitalism is the best system, they acknowledge that some government intervention and regulation can either help or harm the social interest. A pure, unregulated market can lead to negative externalities and market failures, while excessive government regulation can stifle economic growth and innovation. Therefore, economists generally advocate for a mixed economy that balances the benefits of market capitalism with necessary government intervention and regulation.

Question 13

In economics we learn that

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 a choice is made, not all possible alternatives.

Question 14

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

Accepted Answer

Opportunity cost refers to the loss of the highest-valued alternative when making a decision. Marginal benefit relates to the additional benefit gained from consuming an additional unit of a good or service. Scarcity refers to the limited availability of resources. Entrepreneurship refers to the process of pursuing new opportunities and taking on financial risk to start a business.

Question 15

Opportunity cost is defined as the

Accepted Answer

Opportunity cost is the highest-valued alternative that is given up when making a choice. It represents the value of the foregone opportunity.

Question 16

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 of an action is the value of the next best alternative that you give up by choosing that action. If you choose to go to Florida, the opportunity cost is what you would have done otherwise, which could be either working or doing fix-up projects, depending on which was your next best alternative.

Question 17

Opportunity cost means the

Accepted Answer

Opportunity cost refers to the highest valued alternative that is forgone when making a choice. Therefore, the correct answer is B, which states the same. The other options are not correct as they don't represent the concept of opportunity cost.

Question 18

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

The opportunity cost is the value of the best alternative that is forgone. In this case, the best alternative to attending class was going out to lunch with friends. Therefore, the opportunity cost of attending class is the lunch she gave up. The income from working or sleep are not relevant to the decision between attending class and going out to lunch, and therefore not a part of the opportunity cost.

Question 19

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.

Accepted Answer

Statement I is correct as opportunity cost is defined as the value of the next best alternative foregone. Statement II is incorrect as even wealthy economies face scarcity and have to make choices, leading to opportunity costs. Statement III is correct as scarcity, which is the fundamental economic problem, creates the need to make choices and thus opportunity costs.

Question 20

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?

Accepted Answer

The opportunity cost of your evening at the movies was the difference between the score you actually received (60%) and the score you would have received if you had studied (70%). This amounts to a 10% reduction in your grade, as you gave up the chance to improve your score by 10% in order to go to the movies.

Quiz 1: What Is Economics?