Public Administration - Municipal BUS400 Lecture 2: 2 - 1

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greenmuskrat329

28 Dec 2017

School

Seneca College

Department

Public Administration - Municipal

Course

Public Administration - Municipal BUS400

Professor

Alan Bastian

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Document Summary

Opportunity cost: alternative that is given up. Choices have to be made on how to use resources. Costs are incurred when choices are made. Opportunity cost is the cost of using a resource in terms of its best alternative use. What is given up, when a decision is made. Individuals, firms, and governments weigh the costs and benefits of their decisions. Cost-benefit approach: making decisions on the bases comparing net costs and benefits. Production possibilities (p-p): the potential combination of goods and services that could be produced when resources are fully used with a given state of technology. The production possibities schedule shows p-p in a table. The production possibilities curve (ppc) shows p-p graphically. The ppc can be linear or non-linear. As resources are shifted from producing one product to the other, opportunity cost remains constant - resources are equally efficient in producing the two products.

Related Questions

Which statement concerning opportunity costs is false:

A) Opportunity costs can always be expressed in money terms

B) Every choice involves opportunity costs

C) Opportunity costs are the highest-valued alternatives that must be forgone when a choice is made

D) The full cost of activity includes the opportunity costs

E) Economists refer to the forgone benefits of the next-best alternative as opportunity costs.

pinkgrasshopper234

One often-used definition of the term opportunity cost is that it is something that is given up when a choice is made. An example would be the money from working full-time given up by going to school. I suggest using the definition that opportunity cost is in terms of the foregone benefits of the next best alternative that could have been chosen. If the choice is for going to school instead of working full-time, then the opportunity cost would be all the benefits you would enjoy from working full-time in addition to the income you would earn. Using examples from your experiences and what you know, in what manners does the suggested change in definitions offer advantages in evaluating potential outcomes of choices either you or society have to make? How does this second opportunity cost definition help you make better decisions?

6. Given that resources are scarce:

A. A "free lunch" is possible, but only for a limited number of people.

B. Poor countries must make choices, but rich countries do not have to make choices.

C. Opportunity costs are experienced whenever choices are made.

D. Some choices involve opportunity costs while other choices do not

7. The opportunity cost of playing tennis with your friend is:

A. Negative since its good exercise

B. Zero since you already own the tennis racket and play on a public court

C. The next-best alternative use of your time that is forgone.

D. The cost of the tennis lessons you took last year.

8. The concept of opportunity cost would become irrelevant if:

A. The market mechanism functioned to allocate resources.

B. The government allocated resources.

C. The production possibilities curve bowed outward.

D. Resources were no longer scarce.

9. If resources are limited:

A. People will rush to buy more goods than they would otherwise.

B. Businesses will sell more products than they would otherwise.

C. Choices that involve tradeoffs must be made.

D. All individuals are deprived of basic necessities.

10. Which of the following is true about the factors of production?

A. The factors of production as well as technology determine the physical limits to production

B. Rich countries have an unlimited quantity of factors.

C. The factors include natural resources but not skilled labor.

D. Some factors are scarce but other factors are not.

amethystraven1

Public Administration - Municipal BUS400 Lecture 2: 2 - 1

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