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Economics IGCSEPDF 12
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Q.Define and explain the term opportunity cost.(2)
ANS-
is defined as the
concept arises because
forces choices to be made.
Decision: What to spend on?
Allocation of resources : Allocating the national budget between different sectors (e.g.,
healthcare, education, defence, infrastructure).
Opportunity Cost : Increasing spending on building a new highway means forgoing the
opportunity to build a newhospital or provide a larger education subsidy.
Past-paper Questions
Which statement best defines opportunity cost?
A. The total cost of making a choice
B. The financial expense of a product
C. The next best alternative foregone
D. The difference between costs and revenue
2-For a student deciding between studying for an exam or watching a movie, what is the
opportunity cost of watching the movie?
A. The cost of the movie ticket
B. The enjoyment gained from the movie
C. The higher exam grade that could have been achieved
Decision:What to produce?
Allocation of Resources: Allocating capital and land to produce the goods most demanded by
consumers (guided by the price mechanism).
Opportunity Cost : A farmer choosing to grow corn instead of wheat means forgoing the
potential profit from selling wheat.
Governments allocate national resources (funded by taxes and borrowing) to provide public
goods and services for the entire society. Their goal is to maximise social welfare.
(or sacrificed). This
Structured Questions
Opportunity cost
scarcity
Multiple choice questions
1-
nextbestalternative foregone