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1. Which of the following best describes the idea of an opportunity cost? a. The marginal...

1. Which of the following best describes the idea of an opportunity cost? a. The marginal cost of a decision b. The total cost of a decision c. The total value of all alternative options not taken when a decision is made d. The value of the best alternative option not taken when a decision is made 2.Suppose a market is in equilibrium. Then a change occurs and the equilibrium price increases while the equilibrium quantity decreases. What change occurred in the market to cause these changes to price and quantity? a. Increase in supply b. Decrease in supply c. Increase in demand d. Decrease in demand

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Answer #1

Oportunity cost is the best alternative given up when any decision is made. For eg. A company wants invest a given amount in either stock market or back into business. Thus if the returns out of investment in stock market is 500 units and investment in business is 200 units so the opportunity cost is the differnce between the returns ie. 300 units.

So the option is D.

Ques 2.

Whenever price increases , demand decreases as price and demand are negatively related to each other, whereas price is positive ly related to supply so due to change in equilibrium with priCe increase, there will be an increase in supply and decrease in demand.

So option is A and D

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