Opportunity Cost Introduction In this paper you are going to have a list of questions referring to opportunity cost, absolute advantage, and comparative advantage. This is based on Michelle being able to grow 200 pounds of potatoes or raise 50 chickens if she uses all her resources for each. James is able to grow 80 pounds of potatoes or 40 chickens if he uses all his resources for each. What is Michelle’s opportunity cost of producing potatoes? The opportunity cost of producing
Words: 1156 - Pages: 5
Opportunity cost is the monetary value of any activity measured in terms of the value of the next best alternative forgone (that is not preferred). In other language, it is the ritual killing of the second-best choice available to somebody, or group, which has picked among several mutually exclusive choices or capital budgeting decisions. Small Examples: In a restaurant situation, the opportunity cost of eating steak could be trying the salmon. The opportunity cost of ordering both meals could be
Words: 336 - Pages: 2
Opportunity cost, from an economics perspective, is the value of the alternative that must always be sacrificed to obtain a good or service. All sane people have unlimited wants which they try to satisfy with the limited resources of the world. Limited resources lead to scarcity, which then lead people to weigh their alternatives and make choices. In the end, no matter which choice they make, it will always leave behind a cost, an opportunity cost. Basically, with the resource of time, humans engage
Words: 422 - Pages: 2
CONCEPTS OF MICROECONOMICS Weighing Opportunity Costs In our first week of Microeconomics we are looking closely at a specific scenario. We will use what we read and what we learned the first week, about the basics of Microeconomics. We will look closely at opportunity costs and at comparative advantages. The scenario this week is as follows. Two people, Michelle and James live alone in an isolated region. They each have the same resources available and they grow potatoes
Words: 844 - Pages: 4
Unit 1 Individual Project Opportunity Cost and Trade Advantages Heather L. Sellers AIU Online, Microeconomics ECON220-1401A-04 Abstract The unit 1 individual project has requested that specific questions in relation to Comparative Advantage, Absolute Advantage, Opportunity Cost and Trade be completed. This paper will show the formulas to determine the information for who has absolute advantage, who has comparative advantage and what the opportunity cost is for each trade option. This paper
Words: 765 - Pages: 4
Introduction to Microeconomics and Opportunity Cost 1. What is the difference between microeconomics and macroeconomics? The key difference between micro-economics and macro-economics is that micro-economics is concerned with the individual, group or company level; whereas macro-economics is concerned with the study of economics on a national as well as holistic scale. Therefore micro-economics specifically focusses on issues that affect individuals and associated company/enterprise 2. What
Words: 611 - Pages: 3
ANS: B PTS: 1 DIF: Difficulty: Easy NAT: BUSPROG: Analytic LOC: DISC: Scarcity, tradeoffs, and opportunity cost KEY: Bloom's: Comprehension 2. Which of the following statements is true? a. | In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. | b. | The law of increasing opportunity costs assumes that all people have the same ability to produce goods. | c. | Efficiency implies that it is impossible to
Words: 11403 - Pages: 46
so on to the countries that have suffered a disaster like famine or earthquake. From the point of view of the donating country answer the following question. a. Does such donations are free in the economic sense? b. If not, what is the economic cost of such donations? c. Why do countries give aid? Construct an example to answer this question. 2. Suppose a hypothetical country Zion produces only wheat and clothing given the scarce resource that is land and labor. The production possibility
Words: 445 - Pages: 2
Macroeconomics Scarcity and Opportunity Cost Assessment 1. For each of the following, describe the opportunity cost when you decide to do each activity. a. Go to the beach or study for an exam: If I decided to go to the beach my opportunity cost would be my exam that I would most likely fail because of me choosing to get a tan at the beach instead of studying. Now If I chose to study for my exam instead of the beach I would pass my exam but my opportunity cost would be me getting
Words: 1684 - Pages: 7
transformation curve. 2. How is the shape of PPC? The production–possibility frontier can be constructed from the contract curve in an Edgeworth production box diagram of factor intensity. The example used above (which demonstrates increasing opportunity costs, with a curve concave from the origin) is the most common form of PPF. It represents a disparity in the factor intensities and technologies of the two production sectors. That is, as an economy specializes more
Words: 1099 - Pages: 5
