Opportunity Cost (Cambridge (CIE) IGCSE Economics)

Explain an example of opportunity cost in the extract.

Refer to the source material in your answers.

Explain, using information from the extract, how the concept of opportunity cost affects all rubber farmers in Liberia.

Refer to the source material in your answers.

In Tunisia, resource allocation decisions are made by both the public sector and private sector. Tunisia’s GDP increased from 2014 to 2018 but its households saved less. Income levels can be affected by changes in trade union activity and the foreign exchange rate. From 2014 to 2018, Tunisia experienced a number of strikes organised by its largest trade union, the Tunisian General Labour Union. There was also a significant fall in its foreign exchange rate.

Discuss whether or not opportunity cost is important when making decisions about resource allocation

Swaziland is a small African country where six in ten people live in poverty and most firms are small and use little capital equipment. In October 2015 it opened a new airport. Some economists suggest that the building of the airport involved a high opportunity cost and caused a range of external costs. The building of the airport is part of the government’s plan to turn the country from a developing into a developed country.

Discuss whether or not opportunity cost influences decision-making by consumers and firms