Question 1

What is the opportunity cost of taking this exam?

Accepted Answer

The opportunity cost of taking the exam is the highest-valued alternative that you gave up to prepare for and attend the exam. This could include any other activities or opportunities that you could have pursued instead of studying for the exam. Options A, B, D, and E are not accurate descriptions of opportunity cost in this context.

Question 2

How are changes in opportunity cost related to decision-making behavior?

Accepted Answer

Opportunity cost is the cost of forgoing one opportunity to pursue another. When the opportunity cost of doing something is lower, it means that the benefit of doing that activity relative to the cost of what it could have been otherwise is higher. Therefore, individuals will be more likely to choose that activity. Hence, the lower the opportunity cost, the more likely an activity will be done.

Question 3

The government has been trying to mint dollar coins instead of printing paper dollar bills,but people have been reluctant to use coins instead of paper bills.How would an economist explain this reluctance?

Accepted Answer

The opportunity cost of carrying around large quantities of coins is too large, as coins are heavier and bulkier than paper bills, making them less convenient for everyday transactions.

Question 4

An opportunity cost:

Accepted Answer

Opportunity cost is the value of the next best alternative that is given up to make a purchase or take an action. It is not limited to decisions involving expenditures of money or spending time on one thing versus another. It exists for every decision made by individuals, businesses, and governments. Therefore, option D is the correct answer.

Question 5

Restaurants,bars,and convenience stores are often located near college campuses.These businesses frequently charge higher-than-normal prices.They are taking advantage of the fact that students:

Accepted Answer

Students often have busy schedules and prioritize their time, so they are willing to pay higher prices for the convenience of having businesses located near their campus. This allows them to save time and focus on their studies rather than traveling farther to get what they need.

Question 6

According to economists,one reason few professional athletes have PhD's is that the:

Accepted Answer

The opportunity cost of going to graduate school for professional athletes is too high because it involves giving up significant income and career advancement in their sports to pursue further education, which may not offer comparable benefits in their field.

Question 7

An opportunity cost is the:

Accepted Answer

Opportunity cost is the cost of a purchase or decision as measured by what is given up. It is the value of the next best alternative forgone in order to pursue the chosen option.

Question 8

Why would economists find it surprising if the CEO of a large company does his or her own housework?

Accepted Answer

The opportunity cost of a CEO's time is quite high because he or she has a scarcity of time to spend on housework. This is because a CEO's time is extremely valuable and they are likely able to earn more money per hour than the cost of hiring someone else to do their housework. Additionally, a CEO may have other responsibilities that require their time and attention, making it difficult to allocate time for housework. Therefore, it would be surprising for economists if a CEO of a large company does his or her own housework.

Question 9

The opportunity cost of a purchase is:

Accepted Answer

Opportunity cost refers to the alternative good or service that one sacrifices because a different good was purchased. Therefore, the correct answer is D. Choice A is incorrect because even if the item is what you want most, you still have to give up the opportunity to purchase other goods or services. Choice B is incorrect because the selling price does not reflect the opportunity cost. Choice C is incorrect because the employment status is irrelevant to opportunity cost. Choice E is incorrect because the lowest possible price is not necessarily related to opportunity cost.

Question 10

When you chose a major,you likely thought about your skills.Let's say you do not enjoy dealing with numbers.How could you explain to your parents,using logic from economics,why you chose to major in English instead of mathematics?

Accepted Answer

The opportunity cost of learning mathematics is too high because it involves spending time and effort on something you do not enjoy, whereas majoring in English aligns better with your interests and skills.

Question 11

The opportunity cost for Elijah of going to a water park is:

Accepted Answer

Opportunity cost is the value of the next best alternative foregone when a choice is made.

Question 12

The opportunity cost of going to school rather than working is the cost of:

Accepted Answer

The opportunity cost of going to school instead of working is the potential wages that could have been earned if one had worked instead. By attending school, an individual foregoes the opportunity to earn a wage during that time. Food, housing, clothing, and healthcare are all necessary expenses regardless of whether one attends school or works, and therefore do not represent the true opportunity cost of attending school.

Question 13

The government has been considering doing away with minting pennies because they are rarely used for purchases (with most people collecting them or throwing them away).How would an economist best explain this?

Accepted Answer

As prices have increased over time, the value of pennies has decreased. This means that it takes a larger quantity of pennies to make a transaction, and carrying around large quantities of pennies has become burdensome. The opportunity cost of carrying around large quantities of pennies (the cost of the time and effort to carry around the extra weight) has become too high, leading to the reduced use of pennies for transactions.

Question 14

Opportunity cost is the ________ alternative forfeited when a choice is made.

Accepted Answer

Opportunity cost is the highest-valued alternative forfeited when a choice is made. It is the next best alternative that is given up in order to pursue a certain action. Choosing the highest-valued alternative is important because it represents the best use of resources and provides the most benefit.

Question 15

Economics is concerned with the trade-offs that emerge because of scarcity.The term "trade-offs" refers to:

Accepted Answer

Trade-offs refer to the alternative choices that are given up when making a decision due to scarcity. It is the act of sacrificing one thing in order to gain something else. Therefore, option C is the correct choice as it accurately defines trade-offs in the context of economics.

Question 16

I asked my neighbor to rake the leaves on his lawn because they were blowing into my yard.He responded that it would not be rational for him to do so.Why would this be the case?

Accepted Answer

This choice suggests that the neighbor is rational in the economic sense, valuing his time at a certain dollar amount and choosing to delegate the task to someone else for a lower cost. This is a commonly used economic concept called opportunity cost.

Question 17

The opportunity cost of working rather than going to school is:

Accepted Answer

The opportunity cost of working rather than going to school is the higher wages that come with additional education. By choosing to work instead of going to school, the individual is forgoing the potential higher wages that they could earn with additional education.

Question 18

The trade-offs that are made because of scarcity:

Accepted Answer

The trade-offs made because of scarcity are dependent on the value judgments of the decision-maker regarding the relative importance of the alternatives. This means that different people may make different trade-offs depending on their priorities and preferences. Therefore, the answer is E.

Question 19

Instead of taking an economics course,you could have taken a history course that meets at the exact same time.The total cost of taking the economics course would be the:

Accepted Answer

The total cost of taking the economics course includes tuition, textbook and notebook costs, as well as the opportunity cost of not being able to take the history course at the same time. Therefore, the correct option is D.

Question 20

A good is ________ even if it takes a small amount of time,energy,or money to acquire.

Accepted Answer

The answer of A good is ________ even if it...

Quiz 1: Thinking Like an Economist