Lesson 2: Opportunity Cost Big Ideas of the Lesson Because of scarcity, people have to make choices. (d) Along a bowed out PPF as more of a good is produced, the opportunity cost of producing it decreases. Swinburne University of Technology. Using pencil, mark your answers on the answer sheet provided. /ColorSpace /DeviceRGB a. Sunk cost b. 3. Academic year. A. M arket B. $ @H* �,�T Y � �@R d�� ���{���ؘ]>cNwy���M� (You may use the last column in answering the question.) A B c D Reduced specialisation of labour a. And the cost of each source reflects the risk of the assets the company invests in. Practice Questions 2 - Opportunity Cost and Trade. Next lesson. << a) I, … The next best thing that is not chosen is called a person’s opportunity cost. Opportunity cost accounts for alternative uses of resources such as time and money. b. Indicate your answers on the bubble sheet provided. Opportunity Cost Calculation in Excel. B)money C)giving up something for nothing. 10. (�f�y�$ ����؍v��3����S}B�2E�����َ_>������.S, �'��5ܠo���������}��ز�y���������� ����Ǻ�G���l�a���|��-�/ ����B����QR3��)���H&�ƃ�s��.��_�l�&bS�#/�/^��� �|a����ܚ�����TR��,54�Oj��аS��N- �\�\����GRX�����G�����‡�r]=��i$ 溻w����ZM[�X�H�J_i��!TaOi�0��W��06E��rc 7|U%���b~8zJ��7�T ���v�������K������OŻ|I�NO:�"���gI]��̇�*^��� @�-�5m>l~=U4!�fO�ﵽ�w賔��ٛ�/�?�L���'W��ӣ�_��Ln�eU�HER `�����p�WL�=�k}m���������=���w�s����]�֨�]. The opportunity cost of one DVD in South Korea is: a. A great first lesson for any economics class or unit!This teacher centered lesson covers scarcity, choice, opportunity cost and resources. Professionals, Teachers, Students and Kids Trivia Quizzes to test your knowledge on the subject. The opportunity cost of reading a book A) depends on how much the book cost when it was purchased. Production Possibilities Curve as a model of a country's economy. Cost incurred due to shortage of stock is known as _____ a. Imputed cost b. Though, opportunity cost is just one of these topics and you will mostly likely to have only 1 or even 0 questions in your exam, it is indeed an important concept in the real world project management world to help you select the best course of actions to achieve the best value return. c. As you make this decision, what is the opportunity cost of each poster made? /CA 1.0 The opportunity cost of producing 80m capital goods. • A city government has $20,000 to 6. B)money C)giving up something for nothing. Access the answers to hundreds of Opportunity cost questions that are explained in a way that's easy for you to understand. The answer is given above: Each poster costs 300 data entries. There are also questions about what tax rate, the effective or the marginal, to use in the assessment to best capture the tilt in the tax code towards debt. (c) Higher is the production of good 2 greater is the opportunity cost of reducing its production. Other relevant costs include the one-time delivery/ packing cost of $2,000 and the (opportunity) cost of lost … The opportunity cost of the new design of the product will be the increased cost and its inability to compete on price. d. Have a go! Base your answer only on the information above and on comparative-advantage considerations. What is the Opportunity Cost of a Decision? Opportunity Cost and Unemployment: Question and Answer in‘A’Level Economics - Dawson - 1988 - Economic Affairs - … Answer: An opportunity cost of going to college would be the four years of potential foregone earnings that could have been earned in the labor market, had the decision to go to college not been made. Browse from thousands of Economics questions and answers (Q&A). b) Why do the production frontiers of different nations have different shapes? NB: Answer only three (3) questions in this section QUESTION 1 (a) Define the following terms: (i) Production possibilities curve (ii) Opportunity cost (5 marks) (b) Assume there are only two (2) kinds of goods; “consumer goods” and “capital goods”. C)accounting cost. Which of the following statements about opportunity cost is TRUE? It is the cost of given up... Read More. D)substitution cost. One-half ton of steel b. /Type /ExtGState Then consider what else you could be doing with your time or money if you decided not to engage in those activities. PPCs for increasing, decreasing and constant opportunity cost. Export steel b. C. the opportunity cost of producing 400 guns instead of 100 guns is 600 units of bread. Print your name and student number clearly on the answer sheet. Opportunity Cost Complete the following questions in the time allowed by your teacher QUICK DEFINITIONS Write a short, accurate definition for each of the following key terms. 8 . What is the present value of $1,000 received in two years if the … endobj 8. � �l%��Ž��� �W��H* �=BR d�J:::�� �$ @H* �,�T Y � �@R d�� �I �� Practice Questions to accompany Mankiw & Taylor: Economics 2 a. 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(A) rows or coloumns (B) rows and coloumns (C) rows+columns- 1 (D) rows-columns 7) This is a Sample PDF of our Managerial and Cost Accounting Exam You can view the entire Exam (81 pages containing 520 questions plus answers) when you join AccountingCoach PRO. University. The cost of opportunity is the worst of the various alternatives to be abandoned when the choice is made in the face of scarcity. This question polarised performance with a significant number ignoring the ‘marginal’ content of the question, many calculated the opportunity cost cumulatively in … � All workings must be done in the answer booklet. 5) Practice: Opportunity cost and the PPC. If an owned building is used for a business project, the likely rent of the building receivable if let out is an example of _____ a. Sunk cost b. Imputed cost c. Opportunity cost d. Notional cost 43. A A.Budgeting. D.Cost of production. III. stream The PPF can be used to calculate the opportunity cost of various production decisions. For example, given a set of scarce resources, in order to produce additional “butter,” a society has to give up the opportunity to produce some “guns.” Graham Dawson, who has taught economics at Bedford High School for twelve years, gives a model answer to a question that could be found in any‘A’Level examination. Note for students the importance of making financial decisions to spend or save consistent with one’s values, and of always considering the opportunity cost of spending choices as a way to make an informed decision. Gkseries provide you the detailed solutions on Business Economics as per exam pattern, to help you in day to day learning. Opportunity cost is equal to implicit costs plus explicit costs. Mike ... comparative advantage. It applies to both the supply side of the market (production) and the demand side of the market (consumption). A. the opportunity cost of producing 200 guns instead of 100 guns is 750 units of bread. They are duplicates of the questions found in the Topic sub-sections. She takes a full load of classes and has ... Answer: In both, the opportunity cost of 1 car is 5 computers. opportunity cost—choosing to do one thing prevents us from having the opportunity to do another. The person with the lower opportunity cost should perform the chore. 6 0 obj Become a part of our community of millions and ask any question that you do not find in our Economics Q&A library. ECON216 Tutorial 2 Questions and Answers 1. a) What is the reason for increasing opportunity costs? A)the question "what." Q. (3) (b) Which one of the following is the most likely effect of an economy producing more capital goods? The diagram shows: (a) A movement from ‘a’ to ‘b’ has no opportunity cost. d. Are there any gains to be made from trade? B.Capital. Every time someone makes a choice, there are other things that are not chosen. What is Bob’s opportunity cost of producing 1 pizza? >> Which of the following statements about opportunity cost is TRUE? Let us now do the same Opportunity Cost example in Excel. The opportunity cost of the CD is the lunches given up. Opportunity cost is equal to implicit costs plus explicit costs. Since it is always better to be prepared for anything, these sites will direct you to some tried-and-tested exam questions. 40 Multiple Choice questions @ 1.5 marks each. opportunity cost (i.e. If Athletic Country currently produces 300 bats and 300 rackets, what is the opportunity cost of an additional 100 bats? ANSWER: C 27 .Entrepreneurial management is noted for its ability to react quickly and effectively to new _____. If you make it through the mechanics of computing cost of capital, you will see it described as an opportunity cost, a discount rate and a hurdle rate for investments and it is all of the above It is best to answer the question parts in order as Essential Question: How does scarcity relate to choice, resourc Opportunity costs are truly everywhere, and they occur with every decision we make, whether it’s big or small. The person with the lower opportunity cost should perform the chore. Question: The invisible hand refers to: D) upward-sloping because the opportunity cost of holding money rises with the interest rate. 3. b. 2016/2017 PDF (196.08 KB) ... choice, opportunity cost and resources. I. View Managing Answer.pdf from MARKETING 01B at Texas A&M University, –Commerce. Practice question with answers. Opportunity cost only measures direct monetary costs. Practical question (Chapter 1 to 5) University. Define Opportunity Cost as the next-best alternative a person gives up in making a choice, or the thing the person chooses not to do. Answer the following questions: a. These quiz objective questions are helpful for competitive exams. Exercises 1.2. 2. ... it may lose an export opportunity to a competitor that is willing to make a countertrade agreement. Define: opportunity cost Answer The benefit foregone of the best alternative - which is sacrificed when making a decision. Value of the opportunity cost. only relevant variable costs are the $15 variable manufacturing cost ($15 × 5,000 = $75,000 total), since marketing costs are not charged for the special order. ÉP¦Í%9ÿ€òãÓÛÃÓ>dYY²k7òÌ�gëÔ°Vğ�"…¥^jê)&bL#[9Š*`‡Ğ÷$�šNõrï…ˆ?#-£rõY±7ÌRg>s¥ø(‡ãÌÄEô³ê„!Ç•wã@¥NÙŞ73û ¡©�É®’YM¼Á®_`+¥jmöîbİÕ›¬'aäŠla½ä…ò. The marks shown against the requirement(s) for each question should be taken as an indication of the expected length and depth of the answer. Present value intra-year discounting. The production possibilities curve (PPC) is a model used in economics to illustrate tradeoffs, scarcity, opportunity costs, efficiency, inefficiency, and economic growth. The cost of capital is the company's cost of using funds provided by creditors and shareholders. Opportunity cost only measures direct monetary costs. 2 Answers. /ca 1.0 The DVD represents the opportunity cost. 3 0 obj With the largest library of standards-aligned and fully explained questions in the world, Albert is the leader in Advanced Placement®. D)an opportunity cost 40) 41)The term used to emphasize that making choices in the face of scarcity involves a cost is A)utility cost. Graph paper (if required) is provided at the end of the answer booklet. /SA true He has over twenty years experience as … Opportunity Cost: What you give up when you have to make a choice between two things. /Filter /FlateDecode A)the question "what." Fill in the bubbles corresponding to your student number, leaving the last two boxes blank. Opportunity cost c. Imputed cost d. Notional cost 42. What theoretical pedagogy can't drive in, practical examples do! Though, opportunity cost is just one of these topics and you will mostly likely to have only 1 or even 0 questions in your exam, it is indeed an important concept in the real world project management world to help you select the best course of actions to achieve the best value return. Present legible and tidy work. Part 1. Units produced per hour Burgers Pizzas Bob 30 5 Frank 16 4 1. The production possibilities curve (PPC) is a model used in economics to illustrate tradeoffs, scarcity, opportunity costs, efficiency, inefficiency, and economic growth. Why? The cost of investment in manufacturing facilities will be a major one for the Canadian firm, but it is not outside its reach. B. the opportunity cost of producing 500 guns instead of 300 guns is zero since we don't have to give up any bread. Here are some interesting opportunity cost examples that would definitely strengthen your grip on this simple yet rational economic concept! /Type /XObject Clyde Prestowitz, in his assigned reading, cites a study that measures various costs of US trade with China. Microeconomics Topic 1: “Explain the concept of opportunity cost and explain why accounting profits and economic profits are not the same.” Reference: Gregory Mankiw’s Principles of Microeconomics, 2nd edition, Chapter 1 (p. 3-6) and Chapter 13 (p. 270-2). The opportunity cost of the new design of the product will be the increased cost and its inability to compete on price. endobj As a society, we cannot have everything we want and so to have more of one thing, we may have to have less of another. This is very simple. 2017/2018 /Subtype /Image (b) A movement from ‘f’ to ‘b’ has an opportunity cost. We provide all important questions and answers from chapter Business Economics. (b) Economic growth causes the PPF to shift outward (c) From a point within the PPF rearranging production and producing more of all goods is possible. Course. Get help with your Opportunity cost homework. Let us now do the same Opportunity Cost example in Excel. This is easy to see while looking at the graph, but opportunity cost can also be calculated simply by dividing the cost of what is given up by what is gained. Examples: • I have $15.00 to spend. Try this amazing Chapter 1 Section 2 Quiz (Opportunity Cost) quiz which has been attempted 2232 times by avid quiz takers. Opportunity cost (million units) 42 40 36 30 22 12 (a) Explain, using marginal analysis from the table above, the concept of opportunity cost. (4/4) (d) A well-structured answer which makes good use of relevant economic theory and concepts including opportunity cost and productivity in considering both the advantages and disadvantages of an increase Try this amazing Chapter 1 Section 2 Quiz (Opportunity Cost) quiz which has been attempted 2232 times by avid quiz takers. 1) During the next hour John can choose one of the following three activities: playing basketball, watching television, or reading a book. I. If technology advances, then: This is the currently selected item. Opportunity cost is one of the key concepts in the study of economics Economics CFI's Economics Articles are designed as self-study guides to learn economics at your own pace. Exhibit 7 b. 7. Angela is a college student. Opportunity costs are truly everywhere, and they occur with every decision we make, whether it’s big or small. 1 0 obj endobj The opportunity cost of increasing the output of consumer goods from 60m to 90m consumer goods. lucas tonton. Therefore, neither has a comparative advantage in either good. /AIS false Input costs that may not have a direct outlay of money. Opportunity Cost Calculation in Excel. Students will practice note taking with a graphic organizer, answer questions and solve a riddle! C) downward-sloping because the opportunity cost of holding money rises as the interest rate falls. /SM 0.02 Academic year. B)opportunity cost. II. Lesson Abstract: /SMask /None>> With the aid … Answer: In both, the opportunity cost of 1 car is 5 computers. Finally, choose your next best option in order to determine the opportunity cost for you for each activity. 1 2 . In both, the opportunity cost of 1 computer is 1/5 of a car. Quiz 1 – Production Possibilities & Opportunity Costs Version 1 - Yellow Instructions: Answer each of the six questions. /Title (�� P p f a n d o p p o r t u n i t y c o s t q u e s t i o n s a n d a n s w e r s) Export DVDs c. Export steel and DVDs *d. There is no basis for gainful specialization and trade choosing to purchase 2 CDs instead a book because we have a limited amount of money to spend). Also explore over 4 similar quizzes in this category. B)opportunity cost. AP Micro Topic 1.4 Comparative Advantage and Trade Part 1 - Mastering Skills-Answer the following questions to verify that you fully understand opportunity cost, absolute advantage, comparative advantage, and terms of trade. Question 1. If Athletic Country currently produces 100 bats and 400 rackets, what is the opportunity cost of an additional 100 bats? Base your answer only on the information above and on comparative-advantage considerations. I decide to buy a baseball cap instead of a new DVD. Plus Two Economics Introduction Microeconomics One Mark Questions and Answers. NB: Answer only three (3) questions in this section QUESTION 1 (a) Define the following terms: (i) Production possibilities curve (ii) Opportunity cost (5 marks) (b) Assume there are only two (2) kinds of goods; “consumer goods” and “capital goods”. Managing Inventories Concepts: Cost Effectiveness Efficiency Prediction/Forecasting Opportunity Cost Essential /CreationDate (D:20201005001942+03'00') Mike - wash dishes ... comparative advantage. /Producer (�� Q t 4 . In Exhibit 2, plot and connect these points to create Athletic Country's production possibilities frontier. Lesson summary: Opportunity cost and the PPC. Dayne Lee. Nav. C.Nature of business. Unemployment compensation paid by government b. << 9. Study Questions (with Answers) Page 4 of 6 (8) 10. The manufacturing opportunity curve shows different combinations of output: consumers like to consume. These questions are from Chapter 1 Section 2. You are considering adding a microbrewery onto one of your firm's existing restaurants. With the aid … Concordia University. This will entail an increase in inventory of $8000, an increase in accounts payables of $2500, and an … Practice Questions to accompany Mankiw & Taylor: Economics 1 Chapter 3 1. The last option is the most attractive, so Cliff should be the first who is assigned to do the posters. Each can get the same trade-off between goods domestically. College Entrance Practice with confidence for the ACT® and SAT® knowing Albert has questions aligned to all of the most recent concepts and standards. Economic Principles (ECO10004) Uploaded by. The income lost by workers who become unemployed c. Food stamps d. Lost tax receipts e. Which of the following is not one of those costs? In both, the opportunity cost of 1 computer is 1/5 of a car. << Opportunity Cost Assume that you would engage in all of the following activities. Opportunity Cost Questions and Answers - Discover the eNotes.com community of teachers, mentors and students just like you that can answer any question you might have on Opportunity Cost Exhibit 2 Answer: See Exhibit 7. Answer 1. a. B) downward-sloping because the opportunity cost of holding money rises as the interest rate rises. Students will practice note taking with a graphic organizer, answer questions and solve a riddle! 4 0 obj 4. One ton of steel c. One and one-half tons of steel *d. Two tons of steel According to the principle of absolute advantage; Japan should: a. B usiness opportunities C. P roduct D. T echnology ANSWER: B 28 .Which of the following is the back bone of financial plan? It is important to learn to make good economic choices, or decisions. Course. Examiners like testing the relationship between the shape of a PPF and the concept of opportunity cost. Not to engage in all of the CD is the back bone of financial plan a model of new! 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