The opportunity cost of going to college is a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. The U.S. has a comparative advantage in A. cloth. If the opportunity cost for leisure is wages, then is the opportunity cost for work leisure? Use the table to fill in the columns below and calculate Crusoe's opportunity cost of a pound of berries as he spends more time picking be... Russell spends an hour studying instead of playing tennis. 24 dozen roses c. 50 dozen roses d. 150 dozen roses. Consider Mandy's decision to go to college. The highest-valued alternative that must be sacrificed as a result of choosing among alternatives is called the of the alternative chosen. a) tuition at a state university. 10 12 0 1 GOOD A G O O D B 2 3 6 8 2 4 Figure 1.2 Production Possibilities Curve 2 How do we decide on opportunity cost when we have several opportunities that need to be foregone? A free good is a good with zero opportunity cost. Choosing this college means you cant go to that one. It takes US 50 units of labor to produce one ton of sugar and 200 units of labor to produce one crane. The opportunity cost of going to a movie is: a. the price of the ticket. B. explicit costs of inputs such as labor. Which of the following options is correct? Suppose you win $500 from a scratch-off ticket. Example of Zero Opportunity cost Opportunity cost exists only where there is alternative use of resource, in case there is no use of available resource then opportunity cost is deemed to be nil. Your analysis about the interest is regarding the money using which the machine was purchased. B. dollar cost of what is purchased. Initially, suppose Bellissima uses 1 million hours of labor per week to produce corn and 3 million hours per week to produce jeans, while Felicidad uses 3 million hours of labor per week to produce... Frances is a skilled toymaker who is able to produce both trucks and drums. The opportunity cost of working for herself is A. Her annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. For each location, the tabl... What is the opportunity cost of investing in capital? (C) The opportunity cost of increasing production of Good A from two units to three units is the loss of two unit(s) of Good B. The opportunity cost of any activity can be measured by the a. value of the best alternative to that activity. This truck is fully depreciated and costs you on... Apple Computer Inc. decides to make iTunes freely available in unlimited quantities. Suppose that a farmer has land that can produce 20 bushels of corn per acre or 10 bushels of wheat per acre. You could grow crops on that land. Opportunity cost only measures direct monetary costs. What are your opportunity costs in taking an economics course? 2.5 dozen roses b. True or False? D. normal profits. b. the cost of clothing and transportation. False. a. economic profits = total revenue - implicit costs b. economic profits = total revenue - explicit costs c. economic prof... What is an opportunity cost? c. downward-sloping demand. a. From the below options, what constitutes the largest opportunity cost? His objective is to maximize the savings he will have in the bank five years... Robinson and Crusoe live on a deserted island. For whom should the goods be produced? Zero opportunity Cost: Opportunity cost refers to the benefit or value of the alternative that is given up in order to make another choice. The movie Saving Private Ryan is about a military mission to find and recover a particular soldier - Private Ryan. State true or false and justify your answer: Opportunity costs are roughly the same for everyone who attends college. This person's opportunity cost of one bushel of wheat is: a) three bushels of corn b) one-third of... For country A to have a comparative advantage in the production of agricultural products means that, relative to country B, with the same resources: a) country A is better at producing agricultural... Amanda likes to eat bananas and apples with her lunch between classes. c. one half dozen eggs. Oxygen is something we need and we can simply breathe it in. Also, assume the U.S. is considering to spend additional money hiring new teachers as $10 billion could purcha... Are "intermediate goods" included in the calculation of GDP? A severe thunderstorm on the night of the concert makes driving hazardous. For which of the following decisions are opportunity costs relevant? C. both wheat and cloth. Their maximum outputs per hour are listed in the following table. a. a. Which one of the following will most likely... Fris B. The below table shows their Production possibilities schedules, which describe various combinations of fishing... Mountain Mack and Big Lake Bob spend their time carving fishing lures and duck decoys. Similarly, the opportunity cost of an unused factory space is zero. a. The opportunity cost of one more bushel of wheat is: a. decreasing as point B will be moved to point D. b. impossible to determine from the information given. If you were the chief executive officer (CEO) of Johnson and Johnson, describe a situation in which you would use marginal analysis to make a business decision. With respect to the Ricardian model, suppose countries are alike in the amount of labor they have available and in the input requirements needed to produce each unit of the goods. In an average year, he receives $723,000 from selling pianos. Suppose Janet is currently using Combination D, producing one car per day. When there are no alternatives or where there is no choice. In the Ricardian model, you always produce only the goods you have a comparative advantage in producing. a. the economic perspective. In autarky, Jackson produces and consumes 30 head of cattle and 80 kiligrams of wheat, while Tahoe produces and consumes 80 head of cattl... All economic systems have to answer the following questions. The opportunity cost of buying Abba's greatest hits on an online store (such as iTunes) is A. Suppose you can purchase milk for $3 a gallon or eggs for $1.50 per dozen. Basically, opportunity cost is the value of an alternative course of action given the choice to do something else. Which of the following statements is (are) correct? Buford Company rents out a small unused portion of its factory to another company for $1,000 per month. a. C. explicit costs. What is the opportunity cost of 60 dozen orchids? It takes Betty 4 hours to bake a cake and 2 hours to knit a sweater. 4/3 bushels of corn B. Opportunity cost is often used by investors to compare investments, but the concept can be applied to many different scenarios. The core principle of economics is a concept called opportunity cost. If Frank can produce either 20 pizzas or 40 cheesecakes per day, the opportunity cost per pizza is equal to how many cheesecakes? If Shawn can produce donuts at a lower opportunity cost than Sue, then: a. Shawn has a comparative advantage in the production of donuts, b. b. a. How many alternatives is the government faced with in this question? If John can wash a car in 75 minutes and wash a dog in 15 minutes, and Maria can wash a car in 40 minutes and wash a dog in 10 minutes, which of the following statements is true? Earn Transferable Credit & Get your Degree, Get access to this video and our entire Q&A library. All rights reserved. Each acre can support 20 apple trees. Get help with your Opportunity cost homework. Choosing this desert (usuall… But, if no such alternative exists, no opportunity cost is involved in keeping it idle. 2 cheeses. B. there is an opportunity cost of leasing the condo becau... You own The Wedding Crasher on DVD. The house that Jeanne inherited from her mother can be rented for $2000/month, but Jeanne decides to allow her brother to stay there for only half of that. Suppose that the city of Phoenix has started a new sustainability program, and that they are trying to decide how to spend their budget in the first year. B. implicit cost. Suppose a person can produce either two bushels of wheat per hour or six bushels or corn per hour. The following Opportunity Cost examples outline the most common Opportunity Costs examples: Through this example let’s explain how opportunity cost impact the Economic profits and inclusion of Implicit Opportunity Costs helps in determining the true economic profit for the business. An electrician quits her current job, which pays $40,000 per year. a) A promising young mathematician who will command a high salary once she earns her college degree... Julia and Ralph need to decide which one of them will take time off from work to complete the rather urgent task of pruning their trees. d. 1/2 cheese. In one day, Ann can produce 3 term papers or 15 study guides. b. two dozen eggs. The money market account was earning 1% in interest per year or $800,000. She... Jimmy owns a small guitar shop in Perth. The opportunity cost is what could have been brought instead of a Croissant. She currently is producing 100 bushels of corn and 100 bushels of wheat. A free good is available in as great a quantity as desired with zero opportunity cost to society . Zappa now draws an annual salary of $15,000. Andreas can knit 8 scarves per hour and 12 hats per hour. B. must be the same... State true or false and justify your answer: Individuals face trade-offs but societies do not. What are its basic features and alternatives? Example: if the net income for the business is $10,000; that is the amount the business owners are receiving for their investment in the business. What is an opportunity cost, and how does the idea relate to the definition of economics? © copyright 2003-2021 Study.com. b. This means it can be consumed in as much quantity as needed without reducing its availability to others. a) Marginal rate of return b) Internal rate of return c) Opportunity cost d) Sunk cost. The opportunity cost of an item is (a) the number of hours needed to earn money to buy the item. C. difference between the benefits fro... Why is opportunity cost important in capital investment decisions? In an attempt to boost enrollment, in January 1996, a private college in Iowa offered free tuition for seniors graduating from high school in the county where it is located. Ashanti can walk six dogs or mow three lawns in two hours. Further, during the term, you can only work part-time and... Al can make 10 chocolates and 5 candies a year and Betty can make 30 chocolates and 10 candies a year. The current value of the guitar shop is $1.2 million. Imagine that a gardener produces both carrots and potatoes in her garden. A good that is made available at zero price is not necessarily a free good. They spend their time either fishing or collecting coconuts. Use the information above to compute the opportunity cost of producing 1 unit of wheat in each country. Based on this information, which of the following is true? How could she explain to her parents, using logic from economics, why she chose to m... Farmer Brian has 3 acres of land which he farms efficiently. To get the most out of life, to think like an economist, you have to be know what youre giving up in order to get something else. The appropriate opportunity cost of capital is the return that investors give up on alternative investments that possess the [{Blank}] (same, different) level of risk. b. Kris charges $30 an hour. A reasonable estimate of the opportu... Margaret decides to stay home and study for her exam rather than going out with her friends to a movie. According to Buffett, "Ben made his customary calculation of value to price... Are opportunity costs based on a person's tastes and preferences? If this nation devotes all its resources and technology to produce good A, the maximum it can produce is 30 units in a... What are opportunity costs, and some examples in every day life? Suppose the government auctions off permits to car and truck owners, with each permit allowing the user to emit five tons of carbon dioxide each year from her or his vehicle. True b. He has decided to take the job. $... A firm's opportunity cost of producing a good equals the A. explicit cost. A. China can produce a bushel of corn with three workers and a bushel of rice with two workers. Ecuador and Argentina both produce shrimp and wheat. State true or false and justify your answer: Trade-offs are another way of talking about opportunity costs. Discuss what the opportunity cost of attending college is for you, noting that the concepts of opportunity costs and explicit monetary costs are not the same.
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