Which of the following demonstrates opportunity cost?
A)With a new strain of wheat,the wheat crop of Canada grows by 20% with no change in the productive resources devoted to wheat farming.
B)A tax cut increases people's purchases of consumer goods and decreases state expenditures on education.
C)The ravages of World War II reduced Japan's ability to produce goods.
D)Flora gets a 10% raise and increases her expenditures on movies.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the cost of choosing one option over another, in terms of what is given up. In choice B, the increase in consumer goods purchases due to a tax cut comes at the expense of state expenditures on education, illustrating the concept of opportunity cost.

Which of the Following Demonstrates Opportunity Cost