Questions and Answers
How many potted plants should they be able to produce on Day 3?
How does a production possibility chart assist in outlining opportunity cost?
Which scenarios can be considered effects of Sole Sister Shoe Store choosing to sell dress shoes over sneakers? (Check all that apply)
What is a graphical representation of the combination of goods and services that can be produced in a situation?
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Samira's decision to stay on the freshman basketball team and keep working over breaks illustrates what concept?
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One method for studying opportunity cost is to think in terms of:
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Demonstrating opportunity cost is done through production:
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Producers can create their maximum combination of goods, as long as they:
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Which of the following are examples of limited resources on the part of consumers?
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Assessing opportunity cost involves:
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Look at the equation framework. Which of the following lists the proper placement of terms, from left to right, to complete the equation?
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Opportunity cost occurs because of a producer's need to:
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What is Ricardo's opportunity cost after taking the promotion?
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On a production possibility curve, what do data points that fall outside of the curve represent?
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Study Notes
Opportunity Cost Fundamentals
- Opportunity cost reflects the value of the next best alternative that is forgone when making a decision.
- Venya and Kari's flower shop decided to assess potted plant production, revealing they can create 50 potted plants on Day 3.
Production Possibility Chart
- A production possibility chart visualizes trade-offs between different goods by comparing production numbers.
- It helps identify the most efficient allocation of resources by illustrating production limits.
Trade-offs and Choices
- Sole Sister Shoe Store faced consequences of their decision to sell dress shoes over sneakers:
- High school athletes ceased shopping at the store.
- Unsold inventory of sports socks due to decreased sneaker sales.
- Samira's choice to prioritize basketball over work exemplifies a trade-off regarding potential scholarship opportunities.
Key Terms and Definitions
- Production Possibility Curve: Graphical representation of different combinations of goods/services that can be produced.
- Tradeoffs: Evaluating alternatives and the costs associated with them, essential in understanding opportunity costs.
Resource Allocation
- Maximum production combinations are achieved when producers properly allocate resources.
- Limited consumer resources typically include time and money, affecting decision-making.
Assessing Opportunity Cost
- Evaluating opportunity cost requires:
- Making choices and understanding the consequences.
- The structure of evaluating costs includes identifying terms like profit, revenue, and production cost in order.
Additional Insight
- Opportunity costs arise from a producer's need to allocate resources effectively.
- Ricardo's decision to accept a promotion highlights opportunity cost as losing extra time with friends despite gaining a financial benefit.
Production Limits
- Points outside the production possibility curve indicate currently unattainable production levels, signifying resource constraints.
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Description
Test your knowledge of opportunity cost with these flashcards. Learn how production possibility charts can help assess decision-making in business scenarios, such as flower and plant sales. Challenge yourself with questions that enhance your understanding of economic principles.
