(D) This is an example of (constant / increasing / decreasing / zero) opportunity cost per unit for Good A. D) painting 2/3 of a room The opportunity cost of a cake for Josh is The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision. The business will net $2,000 in year two and $5,000 in all future years. C) Both of the above are true. Porvoo Area, Finland. It is an excellent basis for my revision." Marginal analysis b. Scarcity: Productive resources are limited. Suppose you decide to get up now. D. the chosen activity minus the value of, The opportunity cost of something is (a) greater during periods of rising prices. D. sometimes, Opportunity cost is defined as the A. difference between the benefits from a choice and the costs of that choice. CO Opportunity Cost is the potential benefit that an individual or an entity loses by choosing one alternative over the other. B) a stolen good. Ask them to generate some generalisations about cost. C) Jan must have a lower opportunity cost of shoe polishing 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 Click the card to flip Definition 1 / 24 C) varies from person to person Consider an event at work that your company is considering doing, such as a new product, adding more employees, etc. There are roughly 113 million households in the United States, so the total benefit of the system is $4.5 billion per month. According to your textbook, a "free" good is car in 40 minutes and wash a dog in 10 minutes, which of the following statements is true? Return on investment (ROI) is aperformance measure used to evaluate the efficiency of an investment or compare the efficiency of several investments. d. the opportunity cost of something is what. - Interviewed persons in areas under review to gain an . Oct 2016 - Jan 20192 years 4 months. , . Fill in the table below. A) We can conclude nothing about absolute advantage So the opportunity cost of 1 more rabbit is 40 berries, assuming we are in scenario E. 1 more rabbit, I have to give up 40 berries. c. has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. In economics, risk describes the possibility that an investments actual and projected returns are different and that the investor loses some or all of the principal. The lower the opportunity cost of doing an activity X, the more likely activity X will be done, b. I'm a graduate from Toronto Metropolitan University, having done a major in Economics and Finance and a minor in Information Technology Management. Include all implicit and explicit costs of this venture. It is in your best interest to specialize in the area in which your opportunity costs are: a. highest b. constant c. lowest, Opportunity cost is the alternative that must be sacrificed in order to get something else. E. difference betw. Assume that the company in the above example forgoes new equipment and instead invests in the stock market. Several eyewitnesses have been called to testify }, http://www.fte.org/teacher-resources/lesson-plans/edsulessons/lesson-1-opportunity-cost/, Increase in tax rates can reduce tax revenue, After Brexit were doing better than expected, Activity: Three Problems with the UK Labour Market, Article: Labour Elasticity and the Minimum Wage, dont have to hurrytime to stop for coffee and bagel on way to schooltime to look over notes before test. Opportunities. C) Sara has an absolute advantage in carrot chopping 283 views, 12 likes, 0 loves, 0 comments, 2 shares, Facebook Watch Videos from Comune di Santena: Consiglio comunale c) value of what is forgone when a choice is made. Is there such a thing as funeral insurance? b. can be estimated by potential future earnings. $20, because this is the only alte. Accounting profit is the net income calculation often stipulated by Generally Accepted Accounting Principles (GAAP). Briefly list the journey of choices you made today and identify the opportunity costs youve chosen to bear. For the purposes of this example, lets assume it would net 10% every year after as well. Are opportunity costs and sacrifices the same? b) the lowest cost method of meeting goals, without regard to quality or any other feature. Is economic cost the same as opportunity cost? According to this, the opportunity cost for choosing the securities makes sense in the first and second years. Use Visual 1. for example, what are the benefits of eating breakfast? B. the highest valued alternative you give up to get it. Economic activities are those activities that result in monetary or non-monetary gains to the person carrying the activities. c. is generally the same for most people. Imagine you are an attorney representing a a. is the same for everyone pursuing this activity. C) The opportunity cost of producing 1 violin is 15 violas. The machine setup and employee training will be intensive, and the new machine will not be up to maximum efficiency for the first couple of years. The opportunity cost of holding the underperforming asset may rise to the point where the rational investment option is to sell and invest in the more promising investment. What circumstance(s) might change the benefits and/or costs of that situation? C. a sunk cost. If the business goes with the first option, at the end of the first year, its investment will be worth $22,000. Define opportunity cost. advantage in producing that good c. minimum wage laws, health, an. 1 Microeconomics LESSON 2 ACTIVITY 2 Answer Key UNIT Scarcity, Opportunity Cost and Production Possibilities . SC (Teacher), Very helpful and concise. It can help you make better decisions. The opportunity cost of a choice is the value of the best alternative given up. D. an outlay cost. } C. difference between the benefits from a choice and the costs of that choice. When your alarm went off, or someone called you, what choice did you face this morning? Opportunity cost is the value of the next best alternative in a decision. Post these on the board. Considering the value of opportunity costs can guide individuals and organizations to more profitable decision-making. violas each year, or a combination such as 8 violins and 8 violas. We are passionate about transformin You would spend $1,000 either way, so the additional $4,000 ($5,000 - $1,000) is the actual opportunity cost. If there were unlimited resources, would there still be an opportunity cost? Opportunity cost a. represents the best alternative sacrificed for a chosen alternative. b. may include both monetary costs and forgone income. b) level of technology involved. Before making big decisions like buying a home or starting a business, you probably will scrupulously research the pros and cons of your financial decision, but most day-to-day choices arent made with a full understanding of the potential opportunity costs. D) Gloria has a comparative advantage in neither activity Does home and contents insurance cover accidental damage? E) painting 3/2 of a room, ECO2023 Exam 1 Study Guide (ch. C. the least best alternative that must be foregone. Students learn to distinguish opportunity costs from consequences. b. all the possible alternatives forgone. Call me today, confidentially, to review your current talent . The opportunity cost of a particular activity: b) Is the value of all alternative activities that are forgone. 1 answer below 141.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 If investment A is risky but has an ROI of 25%, while investment B is far less risky but only has an ROI of 5%, even though investment A may succeed, it may not. b) difference between the value of what is gained and the value of what is forgone when a choice is made. \begin{aligned}&\text{Opportunity Cost}=\text{FO}-\text{CO} \\&\textbf{where:} \\&\text{FO}=\text{Return on best forgone option} \\&\text{CO}=\text{Return on chosen option} \\\end{aligned} The opportunity cost of going to an outdoor music festival is: a. equal to the highest value of an alternative use of the time and money spent on the festival b. the value of the time spent at the festival c. the enjoyment you receive from going to the fe. What would you tell the jurors about the reliability of eyewitness testimony? did you and your partner make the same choice? Many health systems seek to achieve the best health outcomes possible from a given budget. Question: The opportunity cost of a particular activity Select one: 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 The opportunity cost of a particular activity Which of the following would least, The following are possible effects on the optimal allocation coming from an increase in the price of good X except: a. the budget constraint will decline, with the same interception on Y but a lower interception on X. b. the maximum level of utility attai. The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. (A) The PPC is drawn assuming that; 1 Macroeconomics LESSON 1 Scarcity, Opportunity Cost, Production Possibilities and The opportunity cost of a good is defined as ____. Because opportunity cost is a forward-looking consideration, the actual rate of return (RoR) for both options is unknown today, making this evaluation tricky in practice. B) neither party can gain more than the other. Because opportunity costs are unseen by definition, they can be easily overlooked. Understanding opportunity cost will help an entrepreneur determine the true value of decisions. Squarebird. When it's negative, you're potentially losing more than you're gaining. noun. Opportunity cost is the value of the benefits of the foregone alternative, of the next best alternative that could have been chosen, but was not. b. the monetary value of. The opportunity cost of choosing the equipment over the stock market is 2% (12% - 10%). Question: Your opportunity cost of choosing a particular activity Select one: O a. can be easily and accurately calculated b. cannot even be estimated O O C. does not change over time d. varies, depending on time and circumstances e. is measured by the money you spend on the activity O page This problem has been solved! How is the opportunity cost of time different for someone who earns a fixed salary versus someone who can always choose the number of h, The opportunity cost of something you decide to get is: A. the amount of money you pay to get it. B. the average value of all the alternatives that you forego in order to engage in any economic activity. Is there an exception to this relationship rule. }. D. normal profit. Bottlenecks, for instance, often result in opportunity costs. Or can it change based on the situation? A choice made by comparing all relevant alternatives systematically and incrementally is: a. an opportunity cost. Hiring continues to slow down after historic highs Hiring continued to decline in November 2022 amid increased uncertainty and a slowdown in global economic activity. B. executives do not always recognize opportunities for profit as quickly as they should. D) The opportunity cost of washing a dog is greater for John. 1. If the opportunity cost for leisure is wages, then is the opportunity cost for work leisure? This decision would have been made because the opportunity cost to sign them did not outweigh the opportunity cost to pass on them. Choices made by individuals, firms, or government officials often have long-run unintended consequences that can partially or entirely offset the initial effects of their decisions. This is the amount of money paid out to invest, and getting that money back requires liquidating stock. #mc_embed_signup .footer-6 .widget option { It is equally possible that, had the company chosen new equipment, there would be no effect on production efficiency, and profits would remain stable. CO 3. B. value of the best alternative not chosen. what are the benefits of skipping breakfast? Opportunity cost is used to calculate different types of company profit. Is opportunity cost likely to be constant? It is expressed as the relative cost of one alternative in terms of the next-best alternative. Brazil. In 2018 I worked as a student intern where I developed a program using Microsoft Office macros that identified over 700 cost-saving opportunities for the . Carl is considering attending a concert with a . In other words, by investing in stocks, the company would lose the opportunity of launching a new product line and earning more profits. What benefits do you give up? Suppose you select a sample of 100 consumers. C. the hi, Opportunity cost is defined as: a. the value of the least desired alternative sacrificed to obtain another good or service, or to undertake another activity.