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Opportunity Cost — Quiz Answers

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1
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Read the scenario. The local government in Fairview wants to do something with a corner lot that has been empty for a long time. Option 1 is to build a small park with a playground. Option 2 is to develop a community garden. As the Fairview officials begin to look at the opportunity costs of this decision, what would be a good first step?

A
determine the budget for both projects and choose the cheaper option
B
seek input from community members on what they would most value
C
consult with the mayor and other city officials to see what they recommend
D
talk to officials in other towns who had to make a similar decision about an empty lot
2
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When government officials have to decide about a public policy, what should be the first question they ask?

A
How much do I value this public policy?
B
What must the public give up in the future to have this policy?
C
How much does the public value this policy?
D
What does the public give up now to have this policy?
3

Read the scenario. During her campaign for the US Senate, Candidate A complains that the enormous federal transportation budget takes money directly out of public school classrooms, which, consequentially, negatively affects the lives of children in the country. According to Candidate A, what is the opportunity cost of the large transportation budget?

A
Public school teachers are in a better position to educate children than teachers in other countries.
B
There is not enough money to provide adequate funding for schools to educate children.
C
Public school teachers can use limited funds in creative ways to educate children in the country.
D
There is still enough money available to provide the country’s children with an education.
4

Imagine the US government chooses to spend more money on transportation than on all other areas combined. What would most likely be the opportunity cost of this decision?

A
The United States government would have to postpone some public transportation projects.
B
The United States government would construct a first-rate national public transportation system.
C
The United States government would have less money in the budget for health care and education.
D
The United States government would spend more money on education and health care.
5

When people make an economic choice, they

A
decide how to use their resources to fulfill a want or need.
B
think about where they can borrow money that they need.
C
determine how much money they need to earn at their job.
D
figure out what they need to do to pay their bills on time.
7

Government officials make economic decisions that affect transportation features including city streets, roads, bridges, train lines, and airports. These officials make choices that

A
impact everyone in the community equally.
B
affect where things are built and whom they benefit.
C
have very little impact on the lives of everyday people.
D
must be voted on and approved by the public.
8

When someone is making an economic decision, what is meant by the "long-term costs” of that decision?

A
what the person must earn in the future to pay for what they want to have now
B
what the person has to pay financially for what they want to have now
C
what the person is giving up in the future to have what they want to have now
D
what the person regrets about their decision to purchase something now
9

Local government officials are reviewing the explicit costs for two proposed projects for the town’s main square. The proposed small stage for community events will cost $250,000 to build, while the proposed open-air art gallery will cost $300,000. These costs, however, are estimates. This means that

A
the officials can depend on the projects costing exactly those amounts.
B
the officials made up the amounts without doing any research.
C
the community members may challenge the amounts for accuracy.
D
the projects might end up costing more or less than those amounts.
10

What are the implicit costs associated with economic decisions?

A
the proposed budget for the decision rather than the actual amount spent
B
the amount of money that was spent due to the decision
C
the cost of hiring all personnel to complete the proposed project
D
the choices and options that were lost due to the decision

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