AG Unit 8 FA Dummy 2

If a major U.S. trading partner experiences an economic crisis, the U.S. might:

• Increase manufacturing jobs

• Experience direct economic effects

• Eliminate import quotas

• Raise the minimum wage

A developing nation receiving a loan from the IMF is most likely seeking to:

• Expand its military

• Stabilize its economy

• Fund political campaigns

• Eliminate trade with neighbors

What is the best definition of opportunity cost?

• The total revenue from a business decision

• The benefit gained from every alternative

• The cost of all economic goods

• The value of the next best alternative given up

Which of the following best illustrates opportunity cost?

• Saving money in a piggy bank

• Buying a coffee instead of saving the money

• Looking at product reviews online

• Comparing prices before shopping

When a government builds a road instead of a hospital, what is the opportunity cost?

• The taxes used to pay for it

• The construction company’s profits

• The hospital that was not built

• The time needed for construction

Why is opportunity cost important in economics?

• It determines the cost of taxes

• It helps identify every possible outcome

• It explains economic laws

• It shows the value of what is given up

A student chooses to study instead of going to a concert. What is the opportunity cost?

• The price of concert tickets

• The studying done during that time

• The concert experience missed

• The food eaten while studying

In a market economy, why do individuals weigh costs and benefits?

• To pay higher taxes

• To ignore inflation

• To maximize satisfaction

• To avoid making choices

What is an example of a government cost/benefit analysis?

• A citizen buying groceries

• A family choosing a vacation

• A city deciding to expand a subway line

• A teacher grading papers

What happens when the benefits of a decision are greater than the costs?

• The decision will be taxed

• The decision is considered rational

• The decision is rejected

• The opportunity cost is lost