Multiple Choice
Which of the following best describes the concept of scarcity in economics?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which situation best describes an opportunity cost?
A
A consumer buys a product at a discounted price.
B
A government sets a price ceiling on essential goods.
C
A company increases production because demand for its product rises.
D
A student chooses to spend an hour studying for an exam instead of going to a movie, giving up the enjoyment of the movie.
Verified step by step guidance1
Understand the concept of opportunity cost: it is the value of the next best alternative that is forgone when a choice is made.
Analyze each option by identifying what is given up when a decision is made.
For the consumer buying a product at a discounted price, the focus is on saving money, not on what is sacrificed, so this is not primarily about opportunity cost.
For the government setting a price ceiling, this is a policy decision affecting market prices, not directly illustrating opportunity cost from an individual's choice.
For the company increasing production due to higher demand, this is a response to market conditions, not an example of sacrificing one option for another.
For the student choosing to study instead of going to a movie, the student gives up the enjoyment of the movie, which is the next best alternative, perfectly illustrating opportunity cost.
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