Give an example of a society trade-off.
Define the phrase “Thinking at the Margin.”
Thinking at the margin means making decisions by comparing the extra costs and extra benefits of doing a little more or a little less of something.
Tom had to choose between spending $45 on a concert ticket or on groceries. Since he bought the groceries, we know that the opportunity cost of getting the ticket was __________.
Give an example of a business trade-off.
A business trade-off is when a company chooses between two options, such as spending more money on new equipment or hiring more workers, knowing it cannot fully do both.
When a decision is made, what two things is a decision maker considering?
Why are there trade-offs?
What does the phrase “Choosing is Refusing” mean?
It means that when you choose one thing, you give up the chance to do or have something else.
The government is trying to maintain the infrastructure of the country, provide Social Security benefits to citizens, and regulate airline security. Congress has a budget for spending on all three of $1 billion. They decide to spend 45% on infrastructure, 45% on Social Security Benefits, and 10% on regulating airline security. Based on the information provided in this situation, which of the following best describes the opportunity cost?
What is opportunity cost?
Opportunity cost is the value of the next best alternative that is given up when a decision is made.
If you had a choice between playing golf or going to the movies and you chose to go to the movies, what is the opportunity cost of your decision.
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