Multiple Choice
For a high school graduate, the opportunity cost of attending college is likely to be highest when:
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0. Basic Principles of Economics
Scarcity and Choice
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Choosing between spending money on a new suit or a vacation is an example of:
A
market equilibrium
B
diminishing marginal utility
C
price discrimination
D
opportunity cost
Verified step by step guidance1
Understand the concept of opportunity cost: it refers to the value of the next best alternative foregone when making a choice.
Identify the two options given in the problem: spending money on a new suit or spending money on a vacation.
Recognize that choosing one option means giving up the benefits of the other option, which is the essence of opportunity cost.
Compare this concept with the other options provided: market equilibrium (balance of supply and demand), diminishing marginal utility (decreasing satisfaction from additional units), and price discrimination (charging different prices to different consumers).
Conclude that the problem exemplifies opportunity cost because it involves a trade-off between two mutually exclusive choices.
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