Opportunity cost is the least desirable alternative given up as a result of a decision.
A company that makes baseball caps is underutilizing its resources. What does this mean?
When you are thinking on the margin, the factor that should most influence your decision is most closely described by which of the following terms _________
Tom had to choose between spending $45 on a concert ticket or on groceries. Since he bought the groceries, we know that the opportunity cost of getting the ticket was __________.
What does the phrase “Choosing is Refusing” mean?
It means that when you choose one thing, you give up the chance to do or have something else.
Give an example of a business trade-off.
A business trade-off is when a company chooses between two options, such as spending more money on new equipment or hiring more workers, knowing it cannot fully do both.
Define the phrase “Thinking at the Margin.”
Thinking at the margin means making decisions by comparing the extra costs and extra benefits of doing a little more or a little less of something.
If a country uses up a good portion of its available resources what happens to its production possibilities curve?
Its production possibilities curve shifts inward because fewer resources are available for production.
What does a country’s production possibilities curves depend on?
A country’s production possibilities curve depends on the amount of available resources, technology, and how efficiently those resources are used.
An underutilization of a country’s resources means what?
It means the country is not using all of its resources efficiently, so it is producing less than it is capable of producing.
What is opportunity cost?
Opportunity cost is the value of the next best alternative that is given up when a decision is made.
The government is trying to maintain the infrastructure of the country, provide Social Security benefits to citizens, and regulate airline security. Congress has a budget for spending on all three of $1 billion. They decide to spend 45% on infrastructure, 45% on Social Security Benefits, and 10% on regulating airline security. Based on the information provided in this situation, which of the following best describes the opportunity cost?
With respect to a graph of a production possibilities curve, what does it mean to be at a point inside the production possibilities frontier?
A point inside the production possibilities frontier means resources are being underutilized or used inefficiently, so the economy is producing below its full potential.
What is a production possibilities frontier?
A production possibilities frontier is a graph that shows the maximum combinations of two goods or services that can be produced with available resources and technology.
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