Choice is the fundamental problem of economics because:
resources are scarce relative to wants;
the world is over-populated;
opportunity costs are zero;
factors of production are plentiful;
specialisation and exchange are vital activities.
Opportunity cost is related to:
total revenue;
the cost of a substitute;
forgone alternatives;
marginal cost;
average cost.
A county council has the choice of building a by-pass for £12 million or two hospitals at £6 million each. If they decide to build the by-pass, the opportunity cost of this decision is:
the hospitals;
£12 million;
£6 million;
nil;
it is not possible to tell.
A firm employs 20 previously unemployed builders at £100 per week. The opportunity cost of employing them is:
£100;
£2000;
nil;
it is not possible to tell;
the materials they will use;
A production possibility curve illustrates:
the labour and capital available to a producer;
factors available from a given cost outlay;
maximum possible economic growth;
combinations of factors required to produce a given output;
maximum production of two outputs (or types of output) from a given resource input.