Multiple Choice
The basic purpose of the other-things-equal (ceteris paribus) assumption is to:
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which of the following scenarios involves no opportunity cost?
A
A government allocates funds to healthcare, reducing the budget for education.
B
A person chooses to spend an hour studying instead of watching a movie.
C
A factory uses all its resources to produce only one type of good, foregoing the production of others.
D
A person receives a free ticket to a concert and attends without giving up any other activity.
Verified step by step guidance1
Understand the concept of opportunity cost: it is the value of the next best alternative foregone when making a choice.
Analyze each scenario to identify what is being given up when a decision is made.
For the government allocating funds to healthcare, the opportunity cost is the reduced budget for education, so there is an opportunity cost.
For the person choosing to study instead of watching a movie, the opportunity cost is the enjoyment or relaxation they would have gained from watching the movie.
For the factory using all resources to produce one good, the opportunity cost is the other goods it could have produced with those resources.
For the person receiving a free concert ticket and attending without giving up any other activity, there is no opportunity cost because no alternative is forgone.
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