Multiple Choice
Which of the following best describes scarcity in economics?
88
views
0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which of the following statements is NOT true about opportunity cost?
A
Opportunity cost refers to the value of the next best alternative forgone when making a choice.
B
Opportunity cost is a key concept in understanding how individuals and societies allocate scarce resources.
C
Opportunity cost only includes monetary costs and ignores non-monetary factors.
D
Opportunity cost can be applied to both individuals and firms when making decisions.
Verified step by step guidance1
Step 1: Understand the definition of opportunity cost. Opportunity cost is the value of the next best alternative that is forgone when a choice is made. This includes both monetary and non-monetary factors.
Step 2: Recognize that opportunity cost is a fundamental concept in economics because it helps explain how individuals and societies allocate scarce resources efficiently.
Step 3: Note that opportunity cost applies broadly to decision-making by both individuals and firms, as both face trade-offs when choosing among alternatives.
Step 4: Analyze the statement 'Opportunity cost only includes monetary costs and ignores non-monetary factors.' Since opportunity cost includes all relevant costs, both monetary and non-monetary (such as time, satisfaction, or other benefits), this statement is incorrect.
Step 5: Conclude that the statement which claims opportunity cost only includes monetary costs is NOT true, while the other statements correctly describe opportunity cost.
Related Videos
Related Practice
