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Opportunity Cost Worksheet, Exercises of Economics

Alderson-Broaddus College (AB)Economics

what is your opportunity cost? determine by completing the table

Typology: Exercises

2020/2021

Uploaded on 04/20/2021

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ekaant 🇺🇸

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Name: Class:
Date Taken: Total Possible Marks: 26
Opportunity Cost
Complete the following questions in the time allowed by
your teacher
QUICK DEFINITIONS
Write a short, accurate definition for each of the following key terms. (2 marks for each
good quality definition)
21. Define: opportunity cost
22. Define: interest rate
23. Define: decision-making
QUICK LISTS
In this section, provide an outline or list points which answer the question
44. Give four examples of decisions a business takes
A.
B.
C.
D.
E.
F.
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Download Opportunity Cost Worksheet and more Exercises Economics in PDF only on Docsity!

Name: Class:

Date Taken: Total Possible Marks: 26

Opportunity Cost

Complete the following questions in the time allowed by

your teacher

QUICK DEFINITIONS

Write a short, accurate definition for each of the following key terms. (2 marks for each

good quality definition)

  1. Define: opportunity cost
  1. Define: interest rate
  1. Define: decision-making

QUICK LISTS

In this section, provide an outline or list points which answer the question

4. Give four examples of decisions a business takes

A.

B.

C.

D.

E.

F.

  • 2 -

4

5. An entrepreneur decides to end her career in the world of investment banking

and start a new business running a hotel in Padstow. Identify three potential

opportunity costs arising from this decision:

A.

B.

C.

D.

6. List three factors that make it hard to assess the opportunity cost of a decision

A.

B.

C.

D.

E.

Short Answers

In this section, write a short answer (one or two sentences) for each question.

7. Explain why, in business, decision-making involves risk and uncertainty

8. Briefly explain why opportunity cost is so important in business decision-making

  • 2 -

4

5. An entrepreneur decides to end her career in the world of investment banking

and start a new business running a hotel in Padstow. Identify three potential

opportunity costs arising from this decision:

A. Loss of remuneration - investment banking well paid

B. Loss of feeling of job security and responsibility

C. The risk that the investment in the hotel will fail

D. The return on alternative investments other than the hotel

6. List three factors that make it hard to assess the opportunity cost of a decision

A. Uncertainty - no guarantee that other decisions will prove better

B. Timescale - over what period is the opportunity cost being measured?

C. Importance of financial v non-financial rewards - which is most important?

D. Availability of information - are benefits and costs of decisions quantifiable?

E. Accuracy / reliability of estimates and forecasts

Short Answers

In this section, write a short answer (one or two sentences) for each question.

7. Explain why, in business, decision-making involves risk and uncertainty

Valid points include:

Many business decisions taken every day - they vary in importance

Decisions have to be taken based on available information (e.g financial data) -

but that might be outdated, inaccurate or unreliable

Other decisions taken on "hunch" - how can this be measured?

Decisions often have unintended consequences

8. Briefly explain why opportunity cost is so important in business decision-making

Valid points include:

Almost all businesses have limited resources - so choices have to be made

about how resources are allocated

A business can benefit from a range of choices - but which one is best?

Ultimately, management is about decision-making