Multiple Choice
Which of the following is an example of scarcity?
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0. Basic Principles of Economics
Scarcity and Choice
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Which of the following best describes an opportunity cost?
A
A win-win
B
A chance
C
A loss
D
A trade-off
Verified step by step guidance1
Understand the concept of opportunity cost: it refers to the value of the next best alternative that must be given up when making a choice.
Recognize that opportunity cost is not simply a 'win-win' situation, because choosing one option means forgoing another.
Note that opportunity cost is not just a 'chance' or a random event, but a deliberate trade-off between alternatives.
Identify that opportunity cost is not necessarily a 'loss' in the emotional sense, but rather the cost of what you sacrifice when you choose one option over another.
Conclude that the best description of opportunity cost is 'a trade-off,' because it captures the idea of giving up one thing to gain another.
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