1.3

Opportunity cost

9 flashcards to master Opportunity cost

Smart Spaced Repetition

Rate each card Hard, Okay, or Easy after flipping. Your progress is saved and cards are scheduled for optimal review intervals.

Definition Flip

What is opportunity cost?

Answer Flip

The next best alternative foregone when making a choice.

Example: If you spend $10 on a movie ticket, the opportunity cost is what else you could have bought with that $10.
Key Concept Flip

Explain the relationship between opportunity cost and trade-offs.

Answer Flip

Trade-offs are the alternative options you face, and opportunity cost is the single best option you give up when making a choice. Trade-offs are considered, and opportunity cost is the value of the one not selected.

Definition Flip

How does the concept of 'foregone' relate to opportunity cost?

Answer Flip

'Foregone' means 'given up.' Opportunity cost is what is foregone when a decision is made. It's the value of the next best thing you didn't choose.

Key Concept Flip

Explain how opportunity cost affects decision-making.

Answer Flip

Opportunity cost encourages rational decision-making. By considering what is being given up, individuals and firms can make more informed choices about resource allocation.

Key Concept Flip

Give an example of opportunity cost in a production decision for a business.

Answer Flip

A farmer can grow wheat or barley. If they choose to grow wheat, the opportunity cost is the potential profit they could have made from growing barley instead.

Key Concept Flip

How does scarcity influence opportunity cost?

Answer Flip

Scarcity forces us to make choices. Because resources are limited, every choice has an opportunity cost, as we must forgo something else.

Key Concept Flip

Explain the concept of opportunity cost in the context of government spending.

Answer Flip

If a government spends more on healthcare, the opportunity cost might be less funding available for education or infrastructure projects. The government must decide what to forgo.

Definition Flip

Define 'next best alternative' in relation to opportunity cost.

Answer Flip

The 'next best alternative' is the option that was most desirable but not chosen. Its value represents the opportunity cost of the chosen option.

Key Concept Flip

How can understanding opportunity cost lead to better choices?

Answer Flip

Understanding it helps by making people conscious of the real cost of their choices, leading them to select options that provide the highest net benefit after accounting for what is given up.

Test yourself

Practice with MCQ questions to check your understanding.

Take Quiz
1.2 Factors of production 1.4 Production possibility curve

Key Questions: Opportunity cost

What is opportunity cost?

The next best alternative foregone when making a choice.

Example: If you spend $10 on a movie ticket, the opportunity cost is what else you could have bought with that $10.
How does the concept of 'foregone' relate to opportunity cost?

'Foregone' means 'given up.' Opportunity cost is what is foregone when a decision is made. It's the value of the next best thing you didn't choose.

Define 'next best alternative' in relation to opportunity cost.

The 'next best alternative' is the option that was most desirable but not chosen. Its value represents the opportunity cost of the chosen option.

About Opportunity cost (1.3)

These 9 flashcards cover everything you need to know about Opportunity cost for your Cambridge IGCSE Economics (0455) exam. Each card is designed based on the official syllabus requirements.

What You'll Learn

How to Study Effectively

Use the Study Mode button above to test yourself one card at a time. Try to answer each question before flipping the card. Review cards you find difficult more frequently.

Continue Learning

After mastering Opportunity cost, explore these related topics: