Opportunity cost

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 would the opportunity cost be if she takes a holiday on a day she would normally work?

May/June 2015

A large supermarket sought permission to develop land in an area of natural beauty. The local government approved the development, although the area's natural beauty would be destroyed, because many jobs would be created and much-needed revenue would be provided for the local community. Which economic ideas cannot be found in the passage above?

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 goes on holiday on a working day?

May/June 2015

A large supermarket submitted an application to develop land in an area of natural beauty. The local authority approved the construction, although the area's natural beauty would be destroyed, because many jobs would be created and much needed income would be generated for the local community. Which economic ideas cannot be found in the above statement?

May/June 2015

Learners need to weigh up the opportunity cost of attending university. People who graduate from university generally receive higher earnings than those who do not attend university. A larger number of graduates affects a country’s production possibility curve. Some economists argue that students ought to cover the full expense of their university courses and accommodation. Others believe that the government should cover part or all of these costs.

May/June 2015

The diagram illustrates the options available to an individual for 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

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 an individual in terms of leisure and earnings. The person chooses a job that allows more leisure time. What is the opportunity cost for the individual when moving from position Y to position X?

May/June 2016

Stronger demand from China has pushed New Zealand into the position of 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 production. The growth in milk output has reduced its average cost of production, and changes in production techniques have influenced the price elasticity of supply of milk.

May/June 2016

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

May/June 2017

Intense rainfall led to flooding in a region of a country. What could be an opportunity cost of carrying out repairs for the damage caused?

May/June 2017

During August 2015, the Egyptian Government opened a second Suez Canal beside the original canal so that more and larger ships could travel from the Mediterranean Sea to the Gulf of Suez. Building it cost over US$8 billion, and this involved buying land, obtaining capital equipment and paying wages to the workers constructing the canal. At the same time, there were demands for higher spending on healthcare, especially for better quality public hospitals, and on education, particularly adult literacy. The Egyptian Government thinks the canal will draw in more ships, including those carrying goods and those carrying people. A range of factors affects how many goods and people use sea transport. These factors include transport speed, the level of economic activity and the price of other transport methods. Some goods must be moved quickly, and recent years have shown that demand for sea transport is very responsive to recessions and booms. Fig. 1 illustrates how the market for sea transport has lately been influenced by a change in the market for air transport. The Egyptian Government also hopes that new industries linked to the shipping industry will be developed along the canal. Growth of infant industries may help to lower the country’s unemployment rate, which in 2015 stood at 12.5%. In 2015, the country had 90 million people, a population growth rate of 1.5% and a labour force of 28 million. Its death rate was declining. Government spending on healthcare was equal to 4% of Gross Domestic Product (GDP). In 2015, GDP was US$280 billion and the economic growth rate was 5%.

May/June 2017

The Norwegian government decided to invest the profits from oil in stocks, bonds and property. As a result, the chance to improve domestic infrastructure was not taken up. Which economic concept is this most clearly showing?

May/June 2018

Over recent years, more golf courses that require large amounts of water have opened in China. What could be the opportunity cost of this?

May/June 2019

In recent years, more golf courses, which require large amounts of water, have opened in China. What could be the opportunity cost of this?

May/June 2019

A builder takes one hour in total to travel to and from his job. He works $40$ hours each 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 doing the extra hours?

May/June 2021

A farmer transfers land previously used for crops to a company that intends to use that land for wind turbines to generate electric power. What is the opportunity cost of this choice made by the farmer?

May/June 2021

On Friday evening, a student has no plans. She takes out $5 from the $100 held in a savings account and uses it to purchase a present to bring to a party, where admission costs nothing. What is this an example of?

May/June 2022

The governments of low-income countries often permit foreign multinational companies (MNCs) to extract minerals within their borders. Which trade-off between benefit and cost could this create for the low-income countries?

May/June 2022

A student has no plans for a Friday evening. She takes out $5 from the $100 she keeps 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 building of wind farms rather than using it to increase healthcare spending. Which economic concept is shown by this spending choice?

May/June 2023

A firm is choosing between producing good X and good Y over the next five years. The forecast revenue for good X is $20000 per year, while 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, during which she will receive $10\,000$ each year. Once this has finished, she expects to earn $25\,000$ per year. Instead of doing the apprenticeship, she could accept 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

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

May/June 2024

A woman does baking at home, producing small cakes. In one hour, she is able to make 30 cakes, and she spends four hours working each day. The ingredients cost a total of $50, and each cake is sold for $2. What is the opportunity cost if she takes a working day for 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, as a result, cannot use the money for a new airport. Which concepts can be applied to the statement above?

Oct/Nov 2017

Sam made a list of the ways he would most like to spend his Saturday afternoon. Sadly, a thunderstorm led to the cricket match and the town parade being cancelled. Sam chose to go to the cinema. What was the opportunity cost of going to the cinema?

Oct/Nov 2019

Sam made a list showing how he would like to spend his Saturday afternoon. first choice: attend a cricket match second choice: see the annual town parade third choice: go to the cinema fourth choice: pay a visit to relatives Sadly, a thunderstorm led to both the cricket match and the town parade being cancelled. Sam went to the cinema. What was the opportunity cost of going to the cinema?

Oct/Nov 2019

A king has recently been reported to work as a part-time pilot for a multinational airline. Some pilots and police officers have resigned from their jobs to become teachers, while others have left to become sole traders. The wages teachers receive differ with age.

Oct/Nov 2019

The diagram illustrates the production possibility curve (PPC) for an economy that is operating at point X. What is the opportunity cost of moving away from point X so that only consumer goods are produced?

Oct/Nov 2020

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

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. Over recent years Australia has hired teachers from several countries, including Canada, the UK and the US. Most of these teachers specialise in one subject.

Oct/Nov 2022

What does opportunity cost mean?

Oct/Nov 2024

The diagram illustrates a production possibility curve (PPC) for an economy producing two goods, X and Y. Which point indicates the highest opportunity cost of making one additional unit of good X?

Oct/Nov 2024

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?

Oct/Nov 2024

A government plans to construct a new hospital. What is the most likely obstacle that would stop the government from doing this?

Oct/Nov 2025

Which term is used for the loss of possible benefit to a consumer when choosing between alternatives?

Oct/Nov 2025

What value is measured by opportunity cost?

Oct/Nov 2025

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

Oct/Nov 2025