Oppertunity Cost

Question 1

Define Oppertunity Cost

Answer 1

• Is the next best alternative foregone

Question 2

What is the oppertunity cost of moving from point A to B?

Answer 2

Oppertunity Cost is that the output goods have fallen by 4 (22 to 18)

Question 3

What is the oppertunity cost if we want to move point D onto the PPF curve?

Answer 3

The economy is inefficient, and we can increase both goods and services WITH NO Oppertunity Cost

Question 4

Is point C even possible?

Answer 4

Point C isnt possible.

Question 5

Give 2 examples of oppertunity cost.

Answer 5

• Cost of war, spedning money on war is monet they could of spent on healthcare, education etc…
• Spending on new roads, the money spent on developing the roads could be spent again on education, healthcare etc…

Question 6

What does the theory of Comparitive Advantage state?

Answer 6

• That countries should specialise in producing goodsa were they have a lower opperunity cost.

Question 7

What is a free good?

Answer 7

A good which has no opperunity cost, when consumed.

Question 8

Is there an oppertunity cost when consuming a good?

Answer 8

NO! We call these goods free goods, eg, when you breathe in air it doesnt reduce the amount of air others can breathe in.