Opportunity Cost Flashcards
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Questions and Answers

How many potted plants should they be able to produce on Day 3?

  • 30
  • 25
  • 50 (correct)
  • 75
  • How does a production possibility chart assist in outlining opportunity cost?

  • It compares consumer demand of one product to another.
  • It compares production numbers of one product to another. (correct)
  • It compares profit potential of one product to another.
  • It compares production cost of one product to another.
  • Which scenarios can be considered effects of Sole Sister Shoe Store choosing to sell dress shoes over sneakers? (Check all that apply)

  • High school athletes stop shopping there. (correct)
  • Profits decline because dress shoes cost less than sneakers.
  • The inventory of sports socks goes unsold. (correct)
  • Publicity for the store declines.
  • What is a graphical representation of the combination of goods and services that can be produced in a situation?

    <p>Production possibility curve</p> Signup and view all the answers

    Samira's decision to stay on the freshman basketball team and keep working over breaks illustrates what concept?

    <p>A tradeoff</p> Signup and view all the answers

    One method for studying opportunity cost is to think in terms of:

    <p>Tradeoffs</p> Signup and view all the answers

    Demonstrating opportunity cost is done through production:

    <p>Possibility</p> Signup and view all the answers

    Producers can create their maximum combination of goods, as long as they:

    <p>Properly allocate resources</p> Signup and view all the answers

    Which of the following are examples of limited resources on the part of consumers?

    <p>Time and money</p> Signup and view all the answers

    Assessing opportunity cost involves:

    <p>Making choices and dealing with consequences</p> Signup and view all the answers

    Look at the equation framework. Which of the following lists the proper placement of terms, from left to right, to complete the equation?

    <p>Profit, revenue, production cost</p> Signup and view all the answers

    Opportunity cost occurs because of a producer's need to:

    <p>Allocate resources</p> Signup and view all the answers

    What is Ricardo's opportunity cost after taking the promotion?

    <p>Losing extra time to spend with his friends</p> Signup and view all the answers

    On a production possibility curve, what do data points that fall outside of the curve represent?

    <p>A currently unattainable production</p> Signup and view all the answers

    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.

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