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What is the opportunity cost of something?
What is the opportunity cost of something?
Who does the principle of opportunity cost apply to?
Who does the principle of opportunity cost apply to?
What is the principle that states the cost of something is equal to what is sacrificed to get it?
What is the principle that states the cost of something is equal to what is sacrificed to get it?
What does the saying 'There's no such thing as a free lunch' refer to?
What does the saying 'There's no such thing as a free lunch' refer to?
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What is Jacinda's opportunity cost of running her business?
What is Jacinda's opportunity cost of running her business?
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What is NOT considered as the opportunity cost of something?
What is NOT considered as the opportunity cost of something?
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Who does the principle of opportunity cost apply to more?
Who does the principle of opportunity cost apply to more?
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What is the principle of opportunity cost primarily concerned with?
What is the principle of opportunity cost primarily concerned with?
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Which one of these is the opportunity cost of using the hour between economics and math classes to complete math homework instead of economics homework?
Which one of these is the opportunity cost of using the hour between economics and math classes to complete math homework instead of economics homework?
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What do the sacrifices made by societies in order to engage in military spending represent?
What do the sacrifices made by societies in order to engage in military spending represent?
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What do the trade-offs made by the U.S. government to fund the war in Iraq represent?
What do the trade-offs made by the U.S. government to fund the war in Iraq represent?
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What policy question should be considered in Malaysia, according to the possible trade-off example between warships and drinking water in the text?
What policy question should be considered in Malaysia, according to the possible trade-off example between warships and drinking water in the text?
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What is the opportunity cost of grooming the first dog in a day, according to Table 2.1?
What is the opportunity cost of grooming the first dog in a day, according to Table 2.1?
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What is the opportunity cost of grooming the third dog in a day, according to Table 2.1?
What is the opportunity cost of grooming the third dog in a day, according to Table 2.1?
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What does the term 'opportunity cost' refer to?
What does the term 'opportunity cost' refer to?
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What does the term 'trade-off' represent?
What does the term 'trade-off' represent?
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What is the main focus of the concept of opportunity cost?
What is the main focus of the concept of opportunity cost?
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Which one of these is the opportunity cost of fishing?
Which one of these is the opportunity cost of fishing?
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What is the opportunity cost of living in a house you own?
What is the opportunity cost of living in a house you own?
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What is the opportunity cost of using a parking spot in a big city with a shortage of parking?
What is the opportunity cost of using a parking spot in a big city with a shortage of parking?
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What is the opportunity cost of watching a movie a second time instead of going to a football game?
What is the opportunity cost of watching a movie a second time instead of going to a football game?
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What is the opportunity cost of a seven-year-old dressing up like Princess Fiona for Halloween?
What is the opportunity cost of a seven-year-old dressing up like Princess Fiona for Halloween?
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What is an example of the incursion of an opportunity cost?
What is an example of the incursion of an opportunity cost?
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What is the opportunity cost of attending college for one year if your tuition is $24,000, room and board is $8,000, and you could earn $30,000 per year working full time?
What is the opportunity cost of attending college for one year if your tuition is $24,000, room and board is $8,000, and you could earn $30,000 per year working full time?
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What is the opportunity cost of attending college if your tuition is $14,000 per year, room and board is $5,000 per year, and you could earn $26,000 per year working full time?
What is the opportunity cost of attending college if your tuition is $14,000 per year, room and board is $5,000 per year, and you could earn $26,000 per year working full time?
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Study Notes
Opportunity Cost Overview
- Opportunity cost represents the value of the next best alternative foregone when making a decision.
- Applies to individuals, businesses, and governments, as everyone faces choices that involve trade-offs.
Principle of Opportunity Cost
- The principle states that the cost of something is equal to what is sacrificed to obtain it.
- "There's no such thing as a free lunch" illustrates that every choice involves a cost, even if it's not immediately apparent.
Personal Opportunity Costs
- Jacinda's opportunity cost for running her business includes profits she could have earned by working elsewhere or leisure time sacrificed.
- Not considered an opportunity cost: costs that do not involve a trade-off, such as fixed costs that are incurred regardless of the decision.
Societal and Governmental Trade-offs
- Sacrifices made for military spending represent opportunity costs in terms of other social services or infrastructure that could have been funded.
- Trade-offs made by the U.S. government in the war in Iraq highlight choices regarding resource allocation and implications for domestic spending.
Economic Decisions and Trade-offs
- In Malaysia, policymakers should consider trade-offs between military expenditures, such as warships, versus essential needs like drinking water.
- The opportunity cost of grooming the first dog may vary, but it is determined by comparing it to other potential productive activities.
Specific Opportunity Costs
- The opportunity cost of completing math homework over economics homework is the value of the unfinished economics assignment.
- Terms like 'trade-off' denote the sacrifices made when choosing one option over another.
Examples of Opportunity Costs
- Fishing's opportunity cost includes the other activities or catches you pursue instead.
- Living in a house owned might mean forgoing rent income from tenants.
- Using a parking spot in a busy city means sacrificing potential income from renting that space.
- Watching a movie instead of attending a football game reflects lost enjoyment and experiences.
Financial Opportunity Costs of College
- Opportunity cost of attending college for a year, with expenses like tuition ($24,000), room and board ($8,000), and potential earnings ($30,000), totals $62,000.
- Attending college with cheaper tuition ($14,000), room and board ($5,000), and lower earning potential ($26,000) incurs an opportunity cost of $45,000.
Key Concepts Summary
- Opportunity cost highlights the focus on the value of alternatives, essential for economic decision-making.
- The notion of trade-offs is a fundamental part of assessing costs in various scenarios, from personal choices to national policies.
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Description
Test your understanding of the key principles of economics with this quiz on Chapter 2 of "Survey of Economics, 5e (O'Sullivan et al.)". Learn about the principle of opportunity cost and its significance in decision-making. Identify the true definition of opportunity cost and its relationship to sacrifice.
