Chapter 2, Problem 1P

(a)

To determine

Identifying the potential opportunity cost.

Explanation of Solution

The opportunity cost can be simply defined as the next best alternative. In the given situation, if the student spends time by studying only for the economic test, the student forgoes the alternative uses of time such as leisure, studying for other tests, and so on, which is the opportunity cost here.

Economics Concept Introduction

Opportunity cost: The opportunity cost of an action is the highest valued alternative forgone.

(b)

To determine

Identifying the potential opportunity cost.

Explanation of Solution

In the given situation, the 2 hours spent on computer games can be used for some other productive purposes or some leisure activities which is the opportunity cost here.

Economics Concept Introduction

Opportunity cost: The opportunity cost of an action is the highest valued alternative forgone.

(c)

To determine

Identifying the potential opportunity cost.

Explanation of Solution

In this situation, when buying a new car instead of keeping old one loses the chance to use that money to purchase other goods and services or invest in a bank with the high interest. This is the opportunity cost here.

Economics Concept Introduction

Opportunity cost: The opportunity cost of an action is the highest valued alternative forgone.

(d)

To determine

Identifying the potential opportunity cost.

Explanation of Solution

The increasing rate of property tax will reduce the chance of taxpayers to purchase other goods and services. This is the opportunity cost here.

Economics Concept Introduction

Opportunity cost: The opportunity cost of an action is the highest valued alternative forgone.

(e)

To determine

Identifying the potential opportunity cost.

Explanation of Solution

If the number of countries working together to build a space station, it will be expensive and the government has to spend a huge amount to purchase the space station. The government can spend that amount to purchase other goods and services or can spend that amount for the welfare programs. This is the opportunity cost here.

Economics Concept Introduction

Opportunity cost: The opportunity cost of an action is the highest valued alternative forgone.

(f)

To determine

Identifying the potential opportunity cost.

Explanation of Solution

In the given situation, going to a graduate school loses the chance to work and earn the wages. The wages forgone for the graduation is the opportunity cost here.

Economics Concept Introduction

Opportunity cost: The opportunity cost of an action is the highest valued alternative forgone.