Opportunity Cost Economics Quiz

1. What is the opportunity cost of attending college full-time instead of working?

The cost of tuition

The potential earnings from working

The degree earned

None of the above

The opportunity cost is the potential earnings from working, the foregone alternative to attending college.

Explanation

The opportunity cost is the potential earnings from working, the foregone alternative to attending college.

2. What is the opportunity cost of spending time on leisure activities instead of working?

The enjoyment of leisure

The income not earned

The time spent on leisure

None of the above

The opportunity cost is the income not earned, the foregone alternative to leisure activities.

Explanation

The opportunity cost is the income not earned, the foregone alternative to leisure activities.

3. If a business invests in research and development instead of marketing, the potential increase in sales from marketing is the:

Direct cost

Opportunity cost

Marginal cost

Fixed cost

The potential sales increase represents the opportunity cost of the decision to invest in research and development over marketing.

Explanation

The potential sales increase represents the opportunity cost of the decision to invest in research and development over marketing.

4. What is the opportunity cost of saving money instead of spending it?

The interest earned

The items not purchased

The total savings

None of the above

The opportunity cost is the items not purchased, the foregone alternative to saving.

Explanation

The opportunity cost is the items not purchased, the foregone alternative to saving.

5. If a student spends an hour playing instead of studying, what is the opportunity cost?

The fun of playing

The grade in the exam

The time spent playing

None of the above

The opportunity cost is the grade in the exam, the next best alternative to playing.

Explanation

The opportunity cost is the grade in the exam, the next best alternative to playing.

6. If a business invests in new equipment, what is the opportunity cost?

The cost of the equipment

The benefits of the equipment

The alternative investments

None of the above

The opportunity cost is the alternative investments that could have been made instead of buying the equipment.

Explanation

The opportunity cost is the alternative investments that could have been made instead of buying the equipment.

7. What is the opportunity cost of investing in stock A instead of stock B?

The return on stock A

The return on stock B

The difference in returns

None of the above

The opportunity cost is the return on stock B, the foregone alternative.

Explanation

The opportunity cost is the return on stock B, the foregone alternative.

8. If a company produces more of Good X and less of Good Y, what is the opportunity cost?

The cost of Good X

The cost of Good Y

The production of Good Y

The production of Good X

The opportunity cost is the production of Good Y that is given up to produce more of Good X.

Explanation

The opportunity cost is the production of Good Y that is given up to produce more of Good X.

9. If a farmer grows wheat instead of corn, what is the opportunity cost?

The cost of growing wheat

The cost of growing corn

The amount of corn not grown

None of the above

The opportunity cost is the amount of corn not grown, the foregone alternative to growing wheat.

Explanation

The opportunity cost is the amount of corn not grown, the foregone alternative to growing wheat.

10. If you choose to study instead of going to a movie, what is the opportunity cost?

The cost of studying

The cost of the movie ticket

The enjoyment of the movie

None of the above

The opportunity cost is the enjoyment of the movie, the next best alternative to studying.

Explanation

The opportunity cost is the enjoyment of the movie, the next best alternative to studying.

11. What does a point inside the production possibilities curve represent?

Efficiency

Inefficiency

Opportunity cost

None of the above

A point inside the curve represents inefficiency, as resources are not being fully utilized.

Explanation

A point inside the curve represents inefficiency, as resources are not being fully utilized.

12. If a country specializes in the production of a good, what is the opportunity cost?

The goods not produced

The cost of production

The revenue from the good

None of the above

The opportunity cost is the goods not produced, as resources are allocated to the specialized good.

Explanation

The opportunity cost is the goods not produced, as resources are allocated to the specialized good.

13. If a government spends more on defense and less on education, what is the opportunity cost?

The cost of defense

The cost of education

The spending on education

None of the above

The opportunity cost is the spending on education, the foregone alternative to spending on defense.

Explanation

The opportunity cost is the spending on education, the foregone alternative to spending on defense.

14. In economics, what does the principle of scarcity lead to?

Unlimited wants

Opportunity cost

Unlimited resources

None of the above

Scarcity leads to opportunity cost as limited resources require choosing between alternatives.

Explanation

Scarcity leads to opportunity cost as limited resources require choosing between alternatives.

15. What does a production possibilities curve illustrate?

Scarcity and choice

Scarcity and opportunity cost

Opportunity cost and efficiency

All of the above

A production possibilities curve illustrates scarcity, choice, opportunity cost, and efficiency.

Explanation

A production possibilities curve illustrates scarcity, choice, opportunity cost, and efficiency.