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- 1. Multiple Choice
A farmer decides to grow potatoes instead of wheat. What is the opportunity cost of growing the potatoes?
the output of wheat
the price of seed potatoes
the profit from growing potatoes
the time spent preparing the potato field
- 2. Multiple Choice
A deposit of shale oil is discovered in an area of farming. The following estimates are made for a ten-year period.
● If the land is used only for farming it would yield income after tax of $10 billion.
● If the land is used only for shale oil extraction it would yield income after tax of $40 billion.
● The government would receive $5 billion in taxes from farming and $10 billion in taxes from shale oil extraction. What is the opportunity cost of using the land only for farming?
$25 billion
$30 billion
$35 billion
$45 billion
- 3. Multiple Choice
Which statement explains why the pay of doctors is usually higher than the pay of hospital cleaners?
Doctors have a higher opportunity cost in qualifying
Doctors have a more elastic supply than hospital cleaners.
Hospital cleaners belong to trade unions with stronger bargaining powers
Hospital cleaners have a more inelastic demand than doctors
- 4. Multiple Choice
A student decides to buy a ticket for a concert instead of buying a new shirt. What is the opportunity cost of buying the ticket?
the concert
the price of the ticket to the concert
the shirt
the time spent purchasing the ticket
- 5. Multiple Choice
In recent years more golf courses, which use large quantities of water, have opened in China. What is the opportunity cost of this?
cost of water
loss of farmland
sales of golf equipment
wages of golf course staff
- 6. Multiple Choice
A farmer reduces the land used to grow wheat from 80 hectares to 60 hectares and increases the use of the land for growing potatoes from 80 to 100 hectares. What is the opportunity cost of this change?
The output from 20 hectares used for growing potatoes.
The output from 20 hectares used for growing wheat.
The output from 60 hectares used for growing wheat.
The output from 80 hectares used for growing potatoes.
- 7. Multiple Choice
The Norwegian government chose to spend the profits from oil on stocks, bonds and property. The possibility of improving domestic infrastructure, therefore, was not taken. Which economic concept does this best illustrate?
cost of production
finite resources
opportunity cost
production possibility frontier
- 8. Multiple Choice
In economics, natural sunlight is classified as a free good. What is the reason for this?
Sunlight is a gift of nature
Sunlight is a renewable resource
There is no opportunity cost of using sunlight
Unlimited amounts of sunlight can be consumed.
- 9. Multiple Choice
A government allowed a building company to construct new houses which destroyed an area designated as an area of natural beauty. Which concepts can be applied to this statement?
budget surplus; public sector
external cost; opportunity cost
government subsidy; mixed economy
private enterprise; budget deficit
- 10. Multiple Choice
A government decides to spend more on defence and cannot spend money on a new airport. Which concepts can be applied to the above statement?
A budget surplus; external cost
factor of production; private monopoly
public sector; opportunity cost
trade surplus; budget deficit
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