Unit 3: Economics

Answer: C — The correct answer is C) Opportunity cost, because it refers to the value of the next best alternative that is given up when a choice is made. In this scenario, Alex is giving up the opportunity to expand her bakery to open the new café. The other options are incorrect because sunk cost (A) refers to a cost that has already been incurred and cannot be changed, diminishing returns (B) refers to the decrease in marginal output when more units of a variable input are added, and comparative advantage (D) refers to the ability of a country or individual to produce a good or service at a lower opportunity cost than others.

Answer: C — The correct answer is C because the opportunity cost is the value of the next best alternative that is given up as a result of making a decision. In this case, Alex gives up producing 50 cakes to produce 100 more cookies, so the opportunity cost is the 50 cakes. The other options are incorrect because they do not accurately represent the concept of opportunity cost. Option A is incorrect because the cost of ingredients is a direct cost, not an opportunity cost. Option B is incorrect because the profit made from selling the cookies is a benefit, not a cost. Option D is incorrect because the time it takes to produce the cookies is a direct cost, not an opportunity cost.

Answer: C — The correct answer, C, represents the opportunity cost, which is the value of the next best alternative that is given up when a choice is made. In this case, the opportunity cost of opening the new café is the forgone revenue from not expanding the bakery. The other options are incorrect because they represent explicit costs (A, B, and D) rather than the opportunity cost.

Answer: A — The correct answer is A) The concert ticket, because the opportunity cost of a decision is the next best alternative that is given up. In this case, the consumer gives up the opportunity to buy the concert ticket. Option B is incorrect because the money spent on the video game is the cost of the decision, not the opportunity cost. Option C is incorrect because the time spent playing the video game is a benefit of the decision, not the opportunity cost. Option D is incorrect because the consumer's happiness is a subjective outcome of the decision, not the opportunity cost.

Answer: C — The correct answer is C because the opportunity cost of a decision is the value of the next best alternative that is given up. In this case, the town gave up the opportunity to create 50 new jobs by selling the factory to the company. The other options are incorrect because they do not represent the value of the alternative that was given up. Option A is incorrect because the number of tourists that will visit the museum is a potential benefit of the decision, not the opportunity cost. Option B is incorrect because the revenue generated by the museum is also a potential benefit, not the opportunity cost. Option D is incorrect because the cost of building a new factory is not relevant to the opportunity cost of the decision.