MGEA02H3 Lecture Notes - Lecture 1: Opportunity Cost, 4X

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8 Jul 2015

School

UTSC

Department

Economics for Management Studies

Course

MGEA02H3

Professor

Jack Parkinson

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MGEA02H3 Full Course Notes

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If there are more feasible value creating actions than resources (such as time) will allow, then should do the actions with the largest gap (scarcity forces us to make choices: care must be taken to properly calculate (value) both tb & tc (otherwise we might make improper choices) All points above the ppf curve are unattainable. A, b, c, d & e all represent allocations: point c is unattainable, points a, b, d & e are attainable, point d is an inefficient allocation, points a, b & e are efficient alloctions. During this time the amount of labour & capital have grown (the technology may have also improved). As a result the ppf has shifted out. To build one more km of subway line we need to give up of a million cell phones. 3/2 a unit of y to get/make 1 more unit of x. Ocx = - (dy/dx) = (10/4) = 2. 5.

Related Questions

The opportunity cost of an action is always equal to the value of:

A) The things you could have done instead of the action you choose to undertake.

B) The time you give up to undertake the action.

C) The money you give up to undertake the action.

D) The next best alternative for the resources used to undertake the action.

copperox1

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.

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MGEA02H3 Lecture Notes - Lecture 1: Opportunity Cost, 4X

MGEA02H3 Full Course Notes

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