Multiple Choice
Which concept in microeconomics best explains why consumers must make choices when faced with a limited quantity of an item?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Attending college is a case where the ________________ exceeds the monetary cost.
A
opportunity cost
B
explicit cost
C
fixed cost
D
sunk cost
Verified step by step guidance1
Step 1: Understand the concept of costs in economics. The monetary cost of attending college refers to the explicit costs, such as tuition fees, books, and other direct payments.
Step 2: Recognize that opportunity cost includes not only the explicit costs but also the value of the next best alternative foregone, such as income you could have earned if you worked instead of attending college.
Step 3: Compare the terms: fixed cost refers to costs that do not change with the level of output, sunk cost refers to costs that have already been incurred and cannot be recovered, and opportunity cost captures the full economic cost including what you give up.
Step 4: Since attending college involves giving up potential earnings and other opportunities, the total cost exceeds just the monetary (explicit) cost, which means the opportunity cost is greater than the explicit cost.
Step 5: Conclude that the correct term to fill in the blank is 'opportunity cost' because it accounts for both the monetary cost and the value of foregone alternatives.
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