1.3 Opportunity Cost (Cambridge (CIE) IGCSE Economics)

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  • Define the term opportunity cost.

    Opportunity cost is the loss of the next best alternative when making a decision.

  • What does the term scarcity mean?

    Scarcity is the situation where resources are finite in relation to the unlimited wants and needs of humans.

  • What is resource allocation?

    Resource allocation is the decision-making process of assigning scarce resources to their most efficient use.

  • True or False?

    Opportunity cost is a monetary amount.

    False.

    Opportunity cost is not a monetary amount, it is the loss of the next best alternative.

  • Define the term consumer.

    A consumer is an individual or household that uses or consumes goods and services.

  • What does the term producer mean?

    A producer is a business or individual who creates or supplies goods and services.

  • Define the term government.

    A government is the system or group of people running an organised community, often a country.

  • What is a firm?

    A firm is a business organisation that produces or supplies goods or services.

  • Define the term worker.

    A worker is a person who offers their labour in return for a wage or salary.

  • What does the term factors of production mean?

    Factors of production are the scarce resources used in the production of goods and services.

  • True or False?

    Opportunity cost is about the gain of the next best alternative.

    False.

    Opportunity cost is the loss of the next best alternative when making a decision.

  • True or False?

    A consideration of the opportunity cost often results in a different allocation of resources.

    True.

    A consideration of the opportunity cost often results in a different allocation of resources.