Opportunity cost

In a country, the school leaving age is increased from 15 to 17 years. What is the opportunity cost of this longer period of school education for the young people affected?

Feb/March 2016

The diagram illustrates the options open to an individual between leisure and earnings. He currently earns $25$ a day. What is the opportunity cost for the person if he works more and earns $75$ a day?

Feb/March 2017

A student chooses to purchase a ticket for a concert rather than a new shirt. What is the opportunity cost of purchasing the ticket?

Feb/March 2018

A farmer cuts the area used for growing wheat from $80$ hectares to $60$ hectares and raises the area used for growing potatoes from $80$ to $100$ hectares. What is the opportunity cost of this change?

Feb/March 2019

A shale oil deposit is found in a farming area. For the next ten years, the following estimates are given. If the land were used only for farming, it would generate income after tax of $\$10$ billion. If the land were used only for shale oil extraction, it would generate income after tax of $\$40$ billion. The government would collect $\$5$ 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?

Feb/March 2020

The government cuts social security expenditure by $10 \text{ bn}$ so that defence spending can be increased by $10 \text{ bn}$. What kind of example does this illustrate?

Feb/March 2021

The table gives the highest possible output of goods and services for a country. At first, the country made only goods, but it now produces $20$ million units of services. The country still operates at its maximum production possibility. What is the opportunity cost for this country?

Feb/March 2021

The diagram illustrates the options available to an individual between leisure time and earnings. The person chooses a job that provides more leisure time. What is the opportunity cost to the individual of moving from position Y to position X?

Feb/March 2023

A student described opportunity cost as ‘the next best option given up when a course of action is chosen’. Explain why this description is not adequate.

Feb/March 2023

A government states that it plans to allocate an extra $\$10\text{bn}$ to healthcare, with this being funded by lower expenditure on defence. What economic concept is shown by this choice?

Feb/March 2024

An economics graduate decides to take a job in a bank instead of teaching economics, which would have been the next best alternative. What cost is incurred because of this decision?

Feb/March 2025

Each day, a person prepares sandwiches at home for five hours. She produces 20 sandwiches per hour, and each sandwich is sold for $2$ each. What is the opportunity cost if she takes a day off on a working day?

May/June 2015

A large supermarket sought permission to construct on land that formed part of an area of natural beauty. The local government approved the construction, although the area’s natural beauty would be destroyed, because many jobs would be created and much-needed revenue would be provided to the local community. Which economic ideas are not present in the statement above?

May/June 2015

A person prepares sandwiches at home for five hours each day. She produces $20$ sandwiches per hour, and each sandwich is sold for $\$2$. What is the opportunity cost if she goes on holiday on a working day?

May/June 2015

A large supermarket submitted an application to construct on land located in an area of natural beauty. The local government approved the construction, despite the fact that the area's natural beauty would disappear, because many jobs would be created and much needed income would be brought into the local community. Which economic ideas cannot be found in the above statement?

May/June 2015

A person prepares sandwiches at home for five hours every day. She produces $20$ sandwiches per hour, and each sandwich is sold for $\$2$. What is the opportunity cost if she chooses to go on holiday on a day when she would normally work?

May/June 2015

A major supermarket chain sought permission to construct on land situated in an area of natural beauty. The local authority approved the development, although the area’s natural beauty would be damaged, because many jobs would be created and much-needed income would be provided to the local community. Which economic ideas cannot be found in the above statement?

May/June 2015

The diagram illustrates the trade-off an individual faces between leisure and earnings. What is the opportunity cost to the individual of the extra earnings gained as they move from position $X$ to position $Y$?

May/June 2016

Which economic concept must be operating when a country moves along its production possibility curve?

May/June 2016

The diagram illustrates the options available to a person between leisure and income. The person chooses employment that allows more leisure time. What is the opportunity cost for the person of moving from position Y to position X?

May/June 2016

The diagram illustrates the options available to an individual between leisure and earnings. What is the opportunity cost to the individual of the additional earnings when moving from position X to position Y?

May/June 2016

Rising demand from China has turned New Zealand into the world’s largest exporter of dairy products. Its milk exports to China rose by 45% in 2013. Since 2000, more than 300 000 hectares of land in New Zealand have been switched from other farming and forestry uses to dairy use. The rise in milk output has reduced the average cost of production, and changes in production methods have influenced the price elasticity of supply of milk.

May/June 2016

Helium is a gas with a restricted supply. It forms over thousands of years from decaying radioactive rocks. The US government controls 35% of the world’s supply and has been releasing its stocks for sale. Helium is vital in medical scanners. It is also used in party balloons, which some people regard as a wasteful alternative use of a valuable good. Which concepts can be applied to the statement above?

May/June 2017

Intense rainfall led to flooding in a section of a nation. What might be an opportunity cost of carrying out repairs to the damage caused?

May/June 2017

A person is able to produce $10$ items for sale at a craft stall in one day. If the person chooses to paint a picture instead, what is the opportunity cost?

May/June 2017

In August 2015, the Egyptian Government launched a second Suez Canal beside the existing one so that more and larger ships could travel from the Mediterranean Sea to the Gulf of Suez. Construction cost more than US$8 billion, and land had to be bought, capital equipment purchased and wages paid to the workers building the canal. At the same time, there were demands for higher public spending on healthcare, especially to raise the standard of public hospitals, and on education, particularly adult literacy. The Egyptian Government expects the canal to draw in more ships, including those carrying goods and those carrying passengers. The amount of goods and people transported by sea is affected by a range of influences. These include how fast transport is, the level of economic activity and the price of other transport methods. Some goods must be moved rapidly, and recent years have shown how demand for sea transport is highly responsive to recessions and booms. Fig. 1 illustrates how the sea transport market has recently been influenced by changes in the air transport market. Fig. 1 The market for sea transport shows a vertical axis labelled “price of sea transport” and a horizontal axis labelled “quantity of sea transport”. The origin is labelled “O”. There are two horizontal price lines labelled $P_1$ (higher) and $P_2$ (lower). There are two vertical quantity lines labelled $Q_1$ (to the right) and $Q_2$ (to the left). An upward sloping supply curve is labelled “S”. There are two downward sloping demand curves, the original demand curve labelled “$D_1$” (to the right) and a new demand curve labelled “$D_2$” (to the left). The Egyptian Government hopes that new industries linked to shipping will be established along the canal. Developing infant industries may help bring down the country’s unemployment rate, which in 2015 was 12.5%. In 2015, the country had a population of 90 million, a population growth rate of 1.5% and a labour force of 28 million. Its death rate was falling. Government spending on healthcare was equal to 4% of Gross Domestic Product (GDP). 2015 also recorded GDP at US$280 billion and an economic growth rate of 5%.

May/June 2017

Instead of using the profits earned from oil to improve roads, railways and other infrastructure at home, the Norwegian government invested them in stocks, bonds and property. Domestic infrastructure, as a result, was not developed. Which economic concept is shown most clearly here?

May/June 2018

Over the past few years, additional golf courses, which require large amounts of water, have opened in China. What could the opportunity cost of this be?

May/June 2019

In recent years, a greater number of golf courses, which consume large amounts of water, have been built in China. What could the opportunity cost of this be?

May/June 2019

Over the past few years, more golf courses that consume large amounts of water have been built in China. What could be the opportunity cost of this?

May/June 2019

A builder uses one hour each day to travel between home and work. He works 40 hours per week for $\$200$. He is offered the option of working 50 hours a week for an additional $\$75$. What is the opportunity cost to the builder of taking the extra hours?

May/June 2021

A farmer sells farmland that had been used for growing crops to a company that will use the land for wind turbines to generate electric power. What is the opportunity cost of this choice made by the farmer?

May/June 2021

When the output of one good rises, the production of another good falls. Which economic concept is being shown by this change?

May/June 2021

A student has no plans for Friday evening. She takes out $5 from the $100 in her savings account and purchases a gift to bring to a party, where entry costs nothing. What does this involve?

May/June 2022

A student has no plans for a Friday evening. She withdraws $5 from the $100 she keeps in a savings account and uses it to buy a gift to bring to a party, where admission costs nothing. What does this involve?

May/June 2022

Governments in low-income countries often permit foreign multinational companies (MNCs) to extract minerals within their borders. Which clash between benefit and cost could this create for low-income countries?

May/June 2022

A student has no plans for a Friday evening. She takes $5 out of the $100 she holds in a savings account and purchases a gift to bring to a party, where entry costs nothing. What does this involve?

May/June 2022

A government allocates $100\text{m}$ to subsidise the construction of wind farms rather than using it to increase healthcare spending. Which economic concept is shown by this spending choice?

May/June 2023

In 2019, China recorded an economic growth rate of 6.1%, and households in China spent more. Attendance at sports events among Chinese people rose, so the income of leading sportspeople also went up. China exported more even though tariffs increased on some of its products. For instance, the US raised tariffs on imports of Chinese tea and coffee.

May/June 2023

A firm must choose whether to make good X or good Y over the next five years. The forecast revenue for good X is $\$20000$ per year, whereas for good Y it is $\$18000$ per year. What is the opportunity cost of producing good X?

May/June 2024

A student chooses to begin a two-year apprenticeship that pays $\$10\,000$ each year. Once this ends, she expects to receive $\$25\,000$ per year. Instead of doing the apprenticeship, she could take an unskilled job that pays $\$16\,000$ per year. What is the opportunity cost over the two years spent completing the apprenticeship?

May/June 2024

A shale oil deposit is found beneath land currently used for farming. The estimates below are for a ten-year period. • If the land is kept for farming alone, it would generate income after tax of $10 billion. • If the land is used only for shale oil extraction, it would generate income after tax of $40 billion. • The government would collect $5 billion in taxes from farming and $10 billion in taxes from shale oil extraction. What opportunity cost arises if the land is used only for farming?

May/June 2024

In 2020, pay to Mexican workers, including those in the primary sector, declined. This decline helped cause a 9% increase in poverty across the country. In that same year, many small and medium-sized firms shut down. The country also faced traffic congestion. Its capital, Mexico City, is the world’s most congested city.

May/June 2024

A woman makes small cakes at home. She is able to produce 30 cakes per hour and works for four hours each day. The ingredients cost $50 in total and each cake is sold for $2. What is the opportunity cost if she uses one working day for a holiday?

May/June 2025

A power plant is constructed to supply electricity to a rural part of Botswana. What is the opportunity cost for the local economy of constructing the plant?

Oct/Nov 2015

A woman makes small cakes from home. In one hour, she can produce 30 cakes, and she works for four hours each day. The ingredients cost a total of $\$50$, and each cake is sold for $\$2$. What is the opportunity cost if she chooses to take a working day as a holiday?

Oct/Nov 2015

What might the opportunity cost of a nuclear power station be?

Oct/Nov 2016

What might the opportunity cost of a nuclear power station be?

Oct/Nov 2016

A government chooses to increase spending on defence and is therefore unable to fund a new airport. Which concepts apply to the statement above?

Oct/Nov 2017

Sam made a ranked list showing how he would like to spend his Saturday afternoon. 1st option: attend a cricket match 2nd option: watch the yearly town parade 3rd option: go to the cinema 4th option: pay a visit to relatives Sadly, a thunderstorm led to the cricket match and the town parade being cancelled. Sam chose to go to the cinema. What opportunity cost did Sam incur by going to the cinema?

Oct/Nov 2019

Sam made a list of the ways he would rather spend his Saturday afternoon. Sadly, a thunderstorm meant that both the cricket match and the town parade had to be cancelled. Sam then went to the cinema. What was the opportunity cost of going to the cinema?

Oct/Nov 2019

Sam made a list of the ways he would rather spend his Saturday afternoon. Sadly, a thunderstorm meant that the cricket match and the town parade were cancelled. Sam then went to the cinema. What was the opportunity cost of going to the cinema?

Oct/Nov 2019

The diagram illustrates the production possibility curve (PPC) for an economy operating at point X. What opportunity cost would arise if production moved from point X to producing only consumer goods?

Oct/Nov 2020

The production possibility curve (PPC) indicates how many hours each day a student can spend on either entertainment or revision. At present, the student revises for 3 hours a day. As the exams get closer, the student chooses to revise for 9 hours a day. What opportunity cost results from this decision?

Oct/Nov 2021

What does opportunity cost mean for a consumer who spends money on a holiday?

Oct/Nov 2021

Helium is a gas with a scarce supply because it needs thousands of years to be formed. The US government owns $35\%$ of the world’s supply of helium and has been selling off its stocks. Helium is vital for medical scanners. It is also used in party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement?

Oct/Nov 2021

Which diagram illustrates an opportunity cost through movement from point X to point Y?

Oct/Nov 2021

The economic problem creates choices and opportunity cost. People must decide which job to take and where to live. In recent years Australia has hired teachers from several countries, including Canada, the UK and the US. Most of these teachers focus on only one subject.

Oct/Nov 2022

The diagram presents the production possibility curve (PPC) for an economy that produces consumer goods and capital goods. At present, the economy is producing OM consumer goods and OG capital goods. It then chooses to expand capital-goods production to OH. What is the opportunity cost of this choice measured in consumer goods?

Oct/Nov 2023

A hospital has used up every part of the budget it set aside for hiring doctors. What is the opportunity cost to the hospital of hiring one additional doctor?

Oct/Nov 2023

In consumption, what counts as the opportunity cost?

Oct/Nov 2024

The diagram illustrates the production possibility curve (PPC) for an economy. Which cost can be measured as the economy moves along its PPC from point X to point Y?

Oct/Nov 2024

What does the term opportunity cost mean?

Oct/Nov 2024

The diagram illustrates an individual’s options between leisure and earnings. When moving from position X to position Y, what is the individual’s opportunity cost of the additional earnings?

Oct/Nov 2024

A worker chooses to leave a job as a bus driver and accept work as a lorry driver. What would rise the opportunity cost of this decision?

Oct/Nov 2025

A government plans to construct a new hospital. What is most likely to stop the government from carrying out this plan?

Oct/Nov 2025

Which term refers to the potential benefit a consumer gives up when selecting one option instead of another?

Oct/Nov 2025

What does opportunity cost measure?

Oct/Nov 2025

A Swiss multinational food producer raised the prices of its products by an average of 8% in 2022. In the USA, its prices went up by 11.6%. This multinational company (MNC) is among the world’s oldest MNCs. It began as a small business and has expanded over the past 160 years. Throughout this time, opportunity cost has always shaped its decisions.

Oct/Nov 2025