WORKSHEET
OPPORTUNITY COST:
Paper 2 style questions:
1. Explain the possible opportunity cost to India of exporting more
textiles. (4 marks)
2. Explain why the opportunity cost of becoming a teacher for one
worker may be greater than for another worker. (4 marks)
3. What may be the opportunity cost of building an airport? (2 marks)
4. Define opportunity cost using a real life example ( 2 marks)
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Paper 2 style question answers:
Ans 1:- Opportunity cost is the (next) best alternative (1) forgone (1). Textiles that have
been exported might have been sold on the home market (1) may have increase.choice (1)
lowered price (1). Resources may have been moved to producing the textile exports /
resources used to produce textiles could have been used to produce other products (1)
output / exports of other products may have been reduced (1) these products may
provide more revenue / lose revenue from not exporting these products (1).
Ans 2: - Opportunity cost is the (next) best alternative (1) forgone (1).
- One worker may have earned more than another (1) and so would be giving up more
earnings (1). One worker may give up more non-wage benefits (1) example e.g. promotion
chances (1). One worker has further to travel to work / higher costs of traveling (1) loss
of leisure time/time with family / lower net income (1).
Ans 3:- Opportunity cost is the (next) best alternative foregone while making a decision.
(1).
- E.g. building a hospital (1)
Ans 4:- Opportunity cost is the (next) best alternative foregone while making a decision.
(1).
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Paper 1 style questions:
1) Heavy rain caused floods in an area of a country.
What may be an opportunity cost of repairing the damage caused?
A the allocation of government funds to the area instead of on a new airport
B the cost of providing shelter for those made homeless
C the decline in the tourist industry in the area
D the loss of profits from businesses affected by the flood
2) What could be the opportunity cost of a nuclear power station?
A the running costs of the power station
B a coal-fired power station
C the current value of the power station
D the cost of building the power station
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3) What economic concept must be at work when there is movement by a country
along its production possibility curve?
A economies of scale
B equilibrium price
C maximum profit
D opportunity cost
4) A person works at home making tablecloths. He works for 6 hours each day and
makes 15 tablecloths an hour. He sells them for $10 each.
He then decides to work for only 4 hours each day.
What can be concluded from the above information?
A The lost profit would be $300.
B The lost revenue would be $60.
C The daily opportunity cost would be 30 tablecloths.
D The daily opportunity cost would be $50.
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5) A person makes sandwiches at home for five hours each day. She makes 20
sandwiches per hour, and she sells each sandwich for $2 each.
What is the opportunity cost if she takes a holiday on a working day?
A $2
B $40
C 20 sandwiches
D 100 sandwiches
6) Sam wrote a list of how he would prefer to spend his Saturday afternoon.
Unfortunately, a thunderstorm caused the cricket match and the town parade to
be cancelled. Sam went to the cinema.
What was the opportunity cost of going to the cinema?
A Going to the cricket match
B Watching the town parade
C Visiting his relatives
D Losing his Saturday free time
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7) In China, the government is concerned about the level of poverty and the need
for more resources in the poorer regions of the country. As a result, it is
increasing its expenditure there and reducing it in the wealthier regions.
Which economic concept does this government policy illustrate best?
A diseconomies of scale
B market forces
C opportunity cost
D specialisation
8) A student leaves school and decides to spend the next two years at a college to
improve her qualifications.
What is the opportunity cost to the student of taking this decision?
A The cost of the course fees at the college
B The increase in job opportunities she will have as a result of her extra
qualifications
C The lost production due to her not being in work
D The money she would have earned if she had been in work for the two years
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9) The diagram shows the choices for an individual between leisure and earnings.
What is the opportunity cost to the individual of the extra earnings when moving
from position X to position Y?
A $20
B $80
C 4 hours of leisure per day
D 8 hours of leisure per day
10) A firm decides to stop manufacturing ovens and to produce washing machines
instead.
What is the opportunity cost to the firm?
A The additional washing machines produced
B The cost of producing ovens
C The cost of producing washing machines
D The loss of the production of ovens
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11) A government is faced with the choice of spending on either education or
healthcare.
Of what is this an example?
A conservation of resources
B monetary policy
C opportunity cost
D substitution of factors
12) The government of a country with a rapidly increasing population decides to
switch resources from investment to increased subsidies to farmers.
What is the opportunity cost of this decision?
A The profit earned by farmers
B The rent of the land on which food is grown
C The reduction in investment
D The wages of the farm workers
13) What, according to the definition of opportunity cost, is sacrificed when a
decision is taken?
A An identical alternative
B Any possible alternative
C The least valuable alternative
D The next best alternative
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14) A large supermarket applied to build on land which was an area of natural
beauty. The local government allowed the building, even though the natural
beauty of the area would be lost, because many jobs would be created and
much-needed income would be brought to the local community.
Which economic ideas cannot be found in the above statement?
A External cost and private enterprise
B Free market and the conservation of resources
C Opportunity cost and improved standards of living
D Public sector and external benefit
15) Commercial companies are cutting down tropical rainforests for hardwood
timber.
What is the opportunity cost to society of this activity?
A Tax revenue from the sale of the timber
B The environment that is destroyed
C The products made from the timber
D The profits of the companies
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Paper 1 style questions answers:
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