Assume that Kelly’s various possible activities are mutually exclusive. additional output that could be produced answer! In other words, if with the resources used in the chosen activity you could have done others A plus B plus C, but not D, "D" should not be added to the calculation. 4. The opportunity cost of a particular activity a. must be the same for everyone b. is the value of all alternative activities that are forgone c. has a maximum value equal to the minimum wage d. varies from person to person e. can usually be known with certainty ANS: D PTS: 1 DIF: Easy NAT: Reflective Thinking LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity Cost … In Figure 1.1, which labeled points are attainable? e. $20 of income per week The opportunity cost of choosing a particular activity: a. can be easily and accurately calculated. Use the information in Figure 1 to answer questions 4-5 Every decision taken has associated costs and benefits. Learn vocabulary, terms, and more with flashcards, games, and other study tools. c. value of the next most valuable alternative activity 7. PLAY. Remember that opportunity cost is the “next best alternative,” so whatever is in third place in decision-maker’s list of preferences is not included in opportunity cost. After graduating from high school, Steve had three choices, listed in order of preference: e. the opportunity cost of producing more output is greater than the value of the I sold one on c. the benefits he could have received from going to the rival college of the following? The opportunity cost of a particular activity a. must be the same for everyone b. is the value of all alternative activities that are forgone c. has a maximum value equal to the minimum wage d. varies from person to person e. can usually be known with certainty ANS: D Is Subjective 25. a. Opportunity cost definition, the money or other benefits lost when pursuing a particular course of action instead of a mutually-exclusive alternative: The company cannot afford the opportunity cost attached to policy decisions made by the current CEO. Answer to Question: Benefit. Log in Sign up. c. Associated with some unemployment Opportunity cost is the value of something when a particular course of action is chosen. c. $30 Get the detailed answer: What statement can be associated with the opportunity cost of a particular activity? week and income per week from working part-time. But when I sold the second one, the price dropped by 80%.” It is expressed as the relative cost of one alternative in terms of the next-best alternative. d. usually is known with certainty eBay for a high price. b. a significant number of workers have little education 14. that he will lose 5 hours at work, at a wage of $6 per hour. 3. attending the concert equals. 5. It is one of the project selection methods that organizations use, to select projects which … The way we calculate opportunity cost depends on how the productivity data are expressed. He estimates that the cost … e. summed value of all her alternative activities minus the value of the next most valuable alternative activity If the risk-free rate is 7 per cent and the risk... A 6-year lease calls for annual payments of... Price Elasticity of Supply in Microeconomics, Substitution & Income Effects: Impacts on Supply & Demand, Understanding the Demand Curve in Microeconomics, Elasticity in Economics: Practice Problems, Using Market Forces to Manipulate Supply and Demand, Income Elasticity of Demand in Microeconomics, Indifference Curves: Use & Impact in Economics, Price Ceilings and Price Floors in Microeconomics, Price Elasticity of Demand in Microeconomics, Absolute Advantage in Trade: Definition and Examples, How the Government Uses Taxes & Subsidies, Identifying Shortages and Surpluses in Microeconomics, Microeconomic Shifts in Supply and Demand Curves, Opportunity Cost: Definition, Calculations & Examples, Surplus in Economics: Definition & Overview, Principles of Macroeconomics: Certificate Program, College Macroeconomics: Tutoring Solution, CLEP Principles of Macroeconomics: Study Guide & Test Prep, Business 104: Information Systems and Computer Applications, Biological and Biomedical Opportunity cost comes into play in any decision that involves a tradeoff between two or more options. The evaluation of choices and opportunity costs is subjective; such evaluations differ across individuals and societies. Part III Comprehensives (11 Marks) Only B and C No comments: Post a Comment. Opportunity cost is an inevitable part of any business activity since it triggers the process of decision making. Some of the examples of economic activities are business, trade, practicing vocation, starting non-governmental organizations, arbitration activities, and more. d. technology must improve before output can increase “The pizza delivery business in this town is very competitive. Become a Study.com member to unlock this or (3) attend a rival college. The opportunity cost of a choice is the value of the best alternative given up. The opportunity cost of going to the movie is: a) $5. d. $65 frontier, then ( a ) a. a. 1. In Figure 1.1, which labeled points are unattainable? Opportunity cost is an important economic concept that finds application … PART I: Multiple choice (only 15 questions) 15 marks a. is the same for everyone pursuing this activity To play hockey, youd have to give up baseball, to play baseball youd have to give up … has a comparative advantage in producing a particular item, we need to calculate each producer's opportunity costs of creating the items. Only A You are willing to pay $80 for the concert and the concert ticket costs $50. True b. c) II only. initial levels, p = $2 and Q = 80, if the price of fresh strawberry increases from its original price b. In one hour, George can fix 4 flat tires or type 200 words. An opportunity cost is what you'd have to give up to get something. d. A, B and C Opportunity cost is the total sum of what a person or organization has after they compare that sum to what they sacrifice. “My economics professor has chosen to use the Krugman/Wells textbook for this class. “I owned both of the two Jerry Garcia autographed lithographs in existence. 24. e. measures the direct benefits of that activity a. The opportunity cost of a particular activity a. is the same for everyone pursuing this activity b. may include both monetary costs and forgone income c. always decreases as more of that activity is pursued 1. d. usually is known with certainty e. measures the direct benefits of that activity Consumer Soverieghty 4. statements? An opportunity cost is defined as the value of a forgone activity or alternative when another item or activity is chosen. 11. 2. The opportunity cost of a particular activity: b) Is the value of all alternative activities that are forgone. b. summed value of all her alternative activities minus the value of the chosen activity attend the concert, Carl will have to take time off from his part-time job. a. summed value of all her alternative activities The opportunity cost of a particular activity A) must be the same for everyone B) is the value of all alternative activities that are forgone C) varies from person to person D) has a maximum value equal to the minimum wage E) can usually be known with certainty. Simply put, the opportunity cost is what you must forgo in order to get something. person of moving from point a to point b? Simply put, opportunity cost is what you must forgo in order to get something. Using algebra, determine how the equilibrium price and quantity of lemon change from the (Redirected from Opportunity cost of capital) In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view "the required rate of return on a portfolio company's existing securities". d. $10 per hour of studying per week Services, Working Scholars® Bringing Tuition-Free College to the Community. d. Both A and C See more. d) None of the statements is true. Unattainable b. the income he could have earned at the printed circuit board factory plus the direct cost You are willing to pay $20 to see the movie and the movie ticket costs $5. To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action. 6. There is no other use to which it could be put. These activities are also helpful in increasing societal welfare. b. cannot be estimated. d. only the tuition and fees paid for taking classes here Opportunity Cost. b. What can you conclude about the price elasticity of demand in each of the following These costs and benefits are... Our experts can answer your tough homework and study questions. b. Log in Sign up. c. Associated with some unemployment The opportunity cost formula is a simple solution to answer the age old question of whether a particular course of action is worth starting. 200 words Posted by Wanderer at 7:45 AM. of pt = 80¢ by 55¢ to $1.35. b. 10. Economic activities are those activities that result in monetary or non-monetary gains to the person carrying the activities. d. Both A and C True or false: The opportunity cost of an action always equal to the amount of money a person pays to enjoy that action FALSE because the opportunity cost is what a person gives up in order to receive something else and it wont be always be equal to that action. b. The benefit or value that was given up can refer to decisions in your personal life, in a company, in the economy, in the environment, or on a governmental level. cost of driving to the concert and parking there will total an additional $20. b. 4 Marks Which of the following is a Positive Economic Statement a. All rights reserved. d) Has a maximum value equal to the minimum wage. $5 of income per week if I raised the price by as little as 10%.” Only A What are the factors that influence the choice of a consumer? Opportunity cost is the potential loss owed to a missed opportunity, often because somebody chooses A over B, the possible benefit from B is foregone in favor of A. The cost is not the sum of benefits of all the activities not chosen, but only of those that could have been chosen until resources are depleted. 24. In microeconomic theory, opportunity cost, is what we get in return of an action To elaborate, opportunity cost is the loss or the benefit that could have been enjoyed if … Carl is considering attending a concert with a ticket price of $35. The opportunity cost is the indirect cost which is born by the individual when he accepts one decision over the other decisions. For example, the opportunity cost of a machine that is lying idle for the last two years is zero. 8. Which of the following statements about opportunity costs … e. is measured by the money spent on the activity. His opportunity cost of fixing a b. $10 of income per week $35 Figure-2 illustrates the trade-off for a particular student between time spent studying per Sciences, Culinary Arts and Personal All other trademarks and copyrights are the property of their respective owners. 15. Examples of Opportunity Cost Someone gives up … Carl is considering attending a concert with a ticket price of $35. 9. Your answer should be written as Q10 – Q13. The opportunity cost of an activity is best measured a. only by the monetary costs b. by the … have no choice but to buy this book.” Start studying Opportunity Cost. Unattainable © copyright 2003-2021 Study.com. flat tire is a. The primary reasons for which any business needs to determine the opportunity cost are as follows: Base for Decision Making: Opportunity cost provides support for making an appropriate choice while selecting one out of many available alternatives. c. 1 word If the economy is producing a combination of goods inside its production possibilities This concept is also relevant to the profession of Project Management where, opportunity costs are usually the cost of the opportunities we missed by investing our money on a particular project. e. $85 I’d lose half my customers Create your account, b) Is the value of all alternative activities that are forgone. 12. His opportunity cost of going to college here includes which KoBii_Ware. A) must be the same for everyoneB) is the val 13. In order to Even non-monetary exchanges involve opportunity costs, as you may have done something different with the time you chose to spend undertaking any activity in your life. Points on the Production Possibilities Frontier are Part II Short Answers Opportunity cost may vary with circumstances. d. Sunk costs: a. can only be measured in monetary terms. a. e. cannot be determined from the given information Thus, if someone would put the ice cream bar ahead of either type of candy in their ranking of the alternatives then the addition of the ice cream bar would have changed the opportunity cost. c. two hours of studying per week c. Only D Similarly, the opportunity cost of an unused factory space is zero. Only B and C He estimates that the a. Attainable a) III only. (1) study economics at Iowa State University, (2) work in a printed circuit board factory, such as TIME c. some resources are being wasted Create . Points outside the Production Possibilities Frontier are False 25 The opportunity cost of a particular activity ( b ) a. is the same for everyone pursuing this activity b. may include both monetary costs and forgone income c. always decreases as more of that activity is pursued d. usually is known with certainty e. Carl’s opportunity cost of 3. You are willing to pay $20 to see the movie and the movie ticket costs … c. does not change over time. b) I and III only. Opportunity cost is all about the profit a person or organization associates with missed or lost opportunities. d. A, B and C Newer … $55 It can be given a monetary value. d) $65. However, if the ice cream bar would not have been placed ahead of either type of candy then the opportunity cost … b) $30. Suppose that you deciding between seeing a move and going to a concert on a particular Saturday evening. of attending college here (tuition, textbooks, etc.) cost from choosing one activity equals the ( c ) QUALITY: 100% ORIGINAL PAPER – NO PLAGIARISM – CUSTOM PAPER, 57651 – Activity 11What resources are available to help medical, Describe an activity, process, or product of a major company/corporation, Activity 6 – Discuss how core factors, cues to quality, and interpersonal factors, Activity Plan – Create an Activity Plan with your site supervisor. Christina, a materials engineer, has discovered a... At _____ interest rates, the opportunity cost of... Hankins Corporation has 8.9 million shares of... A hospital's cost of capital is 10%. The opportunity cost of a particular activity a. is the same for everyone pursuing this activity b. may include both monetary costs and forgone income c. always decreases as more of that activity is pursued d. usually is known with certainty e. measures the direct benefits of that activity 2. Suppose that you deciding between seeing a move and going to a concert on a particular Saturday evening. Monetary or non-monetary gain received because of an action taken or a decision made. 5 Marks c. Only D a. Attainable It is based on the theory that a dollar can only be invested at one place at a time. Budget. If a particular resource has alternative uses, positive opportunity cost occurs. “I always spend a total of exactly $10 per week on coffee.” What is the opportunity cost for this It is used to evaluate new projects of a company. Opportunity costs are not necessarily monetary, rather when you buy something, the opportunity cost is what you could have done with the money you spent on that thing. Choices involve trading off the expected value of one opportunity against the expected value of its best alternative. 4 flat tires b. may include both monetary costs and forgone income c. always decreases as more of that activity is pursued STUDY. a. the cost of books and supplies at the rival college c) $35. The opportunity cost of a particular activity a. must be the same for everyone b. is the value of all alternative activities that are forgone c. has a maximum value equal to the minimum wage d. varies from person to person e. can usually be known with certaint Click here for the SOLUTION.