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Opportunity Cost Statements Quiz

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Questions and Answers

What is the correct definition of opportunity cost?

Opportunity cost is the actual monetary cost incurred in choosing a particular action.

Opportunity costs only measure direct out of pocket expenditures.

To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action.

The opportunity cost of an action is equal to the value foregone of all feasible alternative actions. (correct)

When deciding between seeing a movie and going to a concert, what is the opportunity cost of going to the movie?

$30

$35 (correct)

$65

If a friend offers you a free ticket to the opera on the day of a Lady Gaga concert, what is the minimum value you would have to place on a night at the opera to choose it over Lady Gaga?

$90

$110

$200 (correct)

Which of the following statements about opportunity costs is FALSE?

Opportunity costs only measure direct out of pocket expenditures. Signup and view all the answers

Which of the following is NOT taken into account when calculating opportunity costs?

The total monetary expenditure on the chosen action. Signup and view all the answers

Suppose a person is willing to pay $30 for a book and buys it for $20. Later, they receive an offer to buy another book for $15. What is the minimum value they should place on this second book to choose it over the first book?

$10 Signup and view all the answers

What is the main focus of sunk costs in decision-making?

Their relevance for future decision-making Signup and view all the answers

According to marginal analysis, what does optimal decision-making involve?

Taking actions whenever the marginal benefit exceeds the marginal cost Signup and view all the answers

Which statement about demand curves is TRUE?

The marginal benefit of consuming a normal good will be higher for richer consumers than for poorer consumers Signup and view all the answers

What does a SHIFT IN DEMAND refer to?

When a change in some economic factor causes a different quantity to be demanded at every price Signup and view all the answers

If cookies are a normal good and incomes increase, what would we expect?

An increase in both equilibrium price and quantity Signup and view all the answers

What is Sarah's producer surplus when she sells her truck for $6,000, having needed a minimum of $5,000?

$1,000 Signup and view all the answers

What is the main difference between change in supply and change in quantity supplied?

Change in supply refers to a shift in the supply curve affecting the whole diagram, while change in quantity supplied refers to a movement along the supply curve due to price changes Signup and view all the answers