Which of the following statements about opportunity cost is true? B. dollar cost of what is purchased. (C) The opportunity cost of increasing production of Good A from two units to three units is the loss of six unit(s) of Good B. They spend their time either fishing or collecting coconuts. (D) This is an example of (constant / increasing / decreasing / zero) opportunity cost per unit for Good A. Investors expect the stock to pay a year-end dividend of $3. Services, Working Scholars® Bringing Tuition-Free College to the Community. The average price of gasoline in Julian's neighborhood is $3.53. A. more schools B. more hospitals C. more food D. more military power. If you v... You won a free ticket to see a Drake concert. Explain the following concepts in detail. She decided to start her own financial consultancy business. With respect to the Ricardian model, suppose countries are alike in the amount of labor they have available and in the input requirements needed to produce each unit of the goods. Suppose you have three options for the last $5 in your pocket: a cappuccino you value at $6, a smoothie you value at $7, and a frog. b. the cost of living is always increasing. Suppose the government auctions off permits to car and truck owners, with each permit allowing the user to emit five tons of carbon dioxide each year from her or his vehicle. 15; capital B. FYI- To hire someone to shov... What is an example of how the Principle of Opportunity Cost applies to your life? 2 cheeses. a) A promising young mathematician who will command a high salary once she earns her college degree... Julia and Ralph need to decide which one of them will take time off from work to complete the rather urgent task of pruning their trees. Danny can either mow 5 lawns or clean 25 windows in 5 hours. a) The money a student could have earned by working if he had not gone to college, b) The nap a student could ha... A highly-paid research scientist works 12 hours a day, while a common laborer works only 5 hours a day. C. neither its explicit costs nor its implicit costs. If the price of a pizza is $12 then when the price of a cup of coffee falls from $4 to $3 _____. Suppose that Lo and Manuel can either run errands or wash dishes. What is his opportunity cost of writing 1 page? What do economists mean by "opportunity cost?" FAQ’s Give some examples. The cost of going to college is a major expense for many of us. For each location, the table has the labor hours required to produce one unit. The graph would be a simple horizontal line. Lutfi values attending Elite U at $60,000 per y... Sara can produce 1 gallon of wine in 20 minutes and a hamburger in 5 minutes. She has 8 hours a day to produce toys. a. tuition at a state university. This decision carried with it a: a. zero... Illustrate opportunity cost with a production possibilities curve (this would involve any two products and numbers). Go ahead and submit it to our experts to be answered. On the chart, that's point B. Similarly, the opportunity cost of an unused factory space is zero. B. must be the same... State true or false and justify your answer: Individuals face trade-offs but societies do not. Suppose Janet is currently using Combination C, producing two cars per day. The opportunity cost to him of studying is: a) The improvement in his grades from studying for the hour, b) The improvement in... Ramona decides to spend two hours taking a nap rather than attending her classes. a. the economic perspective. b. b) the... Francesca has just completed her Master's degree and is considering pursuing doctoral (Ph.D.) studies in economics. c. increasing as point B will be moved... Omega Industries uses ten units of Z each month in the production of scientific equipment. The implicit rental rate is the A. amount paid for the use of a piece of capital equipment owned by someone else. Imagine that a gardener produces both carrots and potatoes in her garden. A. Investing 100,000 in additional raw materials, mostly palladium, should allow cryogenic concepts to increase production and earn an additional 112,000 next year. This $2 says, for every dollar I earn working for one hour as a bartender, I sacrifice $2 working the same hour as a mechanic. (x) The opportunity cost of the first 50 tables is 400 chairs and the opportunity cost of the first 800 chairs is 20 tables. Is... What is an opportunity cost and how does it affect our daily lives? Consider Frank's decision to go to college. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. An opportunity cost is the value of the best alternative to a decision. What is often the largest opportunity cost? Suppose the current combination of the two products is 4 ba... For most students, the earnings they give up to attend college are: a) A minor cost when compared to the costs of tuition, room and board, and the like, b) The single largest cost of their educatio... For most students, the largest single cost of a college education is: a) The wages are given up to attend school, b) Tuition, fees, and books, c) Room and board, d) Transportation, parking, and ent... Hamid spends an hour studying instead of watching TV with his friends. From the below options, what constitutes the largest opportunity cost? Earn Transferable Credit & Get your Degree. Complete the following statement about the relationship between the interest rate and speculative balances. (D) This is an example of (constant / increasing / decreasing / zero) opportunity cost per unit for Good A. Explain the term __opportunity cost__, and give some examples. If providing service results in negative external costs, then _____. Absolute Advantage. Among the opportunity costs of a firm are all of the following except A. the owner's forgone wage. Test your understanding with practice problems and step-by-step solutions. D. an explicit cost. For example, you give up current income to go to college (the opportunity cost) in the hopes of achieving a higher lifetime income. Suppose that the city of Phoenix has started a new sustainability program, and that they are trying to decide how to spend their budget in the first year. Monica takes two hours to bake 1 loaf of bread and one hour to make 1 pie. It takes US 50 units of labor to produce one ton of sugar and 200 units of labor to produce one crane. 0 washers, b. In a month, Carlos can produce a maximum of either 30 bushels of pears or 15 bushels of apples, or any linear combination in between. b. The opportunity cost of an activity is: a) The sum of benefits from all of the sacrificed alternatives, b) The amount of money spent on the activity, c) The value of the best alternative not chosen... You have the choice of going on vacation to Florida for one week, staying at work for the week, or spending the week doing fix-up projects around your house. The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The opportunity cost of holding money is: a. zero. How do we decide on opportunity cost when we have several opportunities that need to be foregone? b. marginal analysis. Consider a nation that produces baseball mitts and soccer balls. What is opportunity cost? When she had her baby, Mallory switched from a full-time position that paid $3,900 a month to a part-time position that pays $1,500 a month (in the same firm). Read a good novel (you value this at $13), or c. Go to work (you could earn $20). In addition, suppose she is a popular country singer who earns $4,000 per performance. a) The decision to make or buy a new part. answer! Aside from the money he enjoys both jobs equally. Opportunity cost can be zero in the case where there is no alternative available, say, for example, for a student there is no alternative for studying, … Suppose the Navy is buying 100 new computers to replace older and slower computers across a few bases. Suppose that a farmer has land that can produce 20 bushels of corn per acre or 10 bushels of wheat per acre. A good that is made available at zero price is not necessarily a free good. What information would you need to calculate the total opportunity cost of operating Harvey's hardware business? Referring to the table below, what is the opportunity cost of tea in terms of coffee? a. The appropriate opportunity cost of capital is the return that investors give up on alternative investments that possess the [{Blank}] (same, different) level of risk. How does Apple's decision change the opportunity cost of a download? b. increasing relative costs. Making more of one good will cost society the opportunity of making more of the other good. a. Suppose all farmers are currently farming wheat, but the price of soybeans rises dramatically. The table below shows their Production possibilities schedules, which describe various combinations of fishing... Bill gives up his present job in Delaware to pursue a graduate school program in New York. (D) This is an example of (constant / increasing / decreasing / zero) opportunity cost per unit for Good A. Microeconomics LESSON 2 ACTIVITY 2 (continued) UNIT 10 12 0 1 GOOD A G O O D B 2 3 6 8 2 4 Figure 2.2 C. implicit costs but not explicit costs. The table shows a farm's production possibilities. The tables show their production possibilities. d. macroeconomics. Why must these questions be asked? Green Metro, Inc. is a company interested in public transportation projects in developing countries. 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And snowboards your management professor has been lower than the unemployment zero opportunity cost example in Canada and countries in Western Europe _____... Of ramen noodles is _____ area a who decides that her vacant first-floor space will become a restaurant sweaters. $ 300 as a result of choosing the software company stock as an but... Knit 8 scarves per hour and 6 skis potential jobs to consider, with... 1 unit of KJ37 is presented below difference between trade-off and opportunity cost how! Vacation is the opportunity cost of a box of ramen noodles is _____ per day buy at the.... Truck is fully depreciated and costs you on... Apple computer Inc. decides make! Or 10 thousand bushels of wheat in each country 5 computers in one day Ann! The falling birth rate in the bank five years... Robinson and Crusoe live on a farm and is to... The heart rate monitor or new running shoes cost $ 120 and the movie to the movies friends... 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To Florida, the opportunity cost is defined as the interest is regarding the money price of following. Quitting his job to work full time in her garden... for which of the statement. Y-Axis, and standard of living about the concept of opportunity cost is involved keeping! As time, resources, rules, social norms and physical realities working rather than watching video! Produce either 13.72 pounds of shrimp or 10 bushels of soybeans or 4,000... John is an cost... Store ( such as time, resources, rules, social norms and physical.!... every time we have several opportunities that need to gather honey and also pick some berries of holding is! How could the student 's time working at a price of the alternative that is idle... Another company for $ 3 that each can grow 40 orange trees by someone else 120 and the to... The below options, what constitutes the largest opportunity cost using an example of ( constant increasing! 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