Scarcity and Opportunity Cost of Choices
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Scarcity, Choice and Opportunity Cost
1. What are resources? Describe two different types of resources.
Resources are anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants. Capital resources include machinery, equipment, and structures used to produce other goods and services. Human resources include labor, skills, and knowledge. Products of nature can also be used as resources.
Difficulty: E Type: D
2. List the three basic economic questions that all societies must answer.
(1.) What will be produced? (2.) How will it be produced? (3.) Who will get what is produced?
Difficulty: E Type: F
3. Explain the economic concept of opportunity cost.
The opportunity cost of something is the best alternative that we give up when we make a choice or a decision.
Difficulty: E Type: D
4. Suppose you have saved $300. You can spend it on a new stereo or on a weekend skiing trip. What is the opportunity cost of going on the skiing trip?
The opportunity cost of the skiing trip is the value of the next best alternative for using the $300 you have saved. If the nest best alternative is purchasing the stereo, then the opportunity cost of going skiing is the enjoyment foregone by not purchasing the stereo.
Difficulty: E Type: C
5. What is the opportunity cost of attending class today?
The opportunity cost of attending class today is the next best alternative for your time for including sleeping, studying for another class, or earning income at a job.
Difficulty: E Type: C
6. Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."
Assuming that the individual had no other reason to
Scarcity, Choice and Opportunity Cost
1. What are resources? Describe two different types of resources.
Resources are anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants. Capital resources include machinery, equipment, and structures used to produce other goods and services. Human resources include labor, skills, and knowledge. Products of nature can also be used as resources.
Difficulty: E Type: D
2. List the three basic economic questions that all societies must answer.
(1.) What will be produced? (2.) How will it be produced? (3.) Who will get what is produced?
Difficulty: E Type: F
3. Explain the economic concept of opportunity cost.
The opportunity cost of something is the best alternative that we give up when we make a choice or a decision.
Difficulty: E Type: D
4. Suppose you have saved $300. You can spend it on a new stereo or on a weekend skiing trip. What is the opportunity cost of going on the skiing trip?
The opportunity cost of the skiing trip is the value of the next best alternative for using the $300 you have saved. If the nest best alternative is purchasing the stereo, then the opportunity cost of going skiing is the enjoyment foregone by not purchasing the stereo.
Difficulty: E Type: C
5. What is the opportunity cost of attending class today?
The opportunity cost of attending class today is the next best alternative for your time for including sleeping, studying for another class, or earning income at a job.
Difficulty: E Type: C
6. Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."
Assuming that the individual had no other reason to