Examkin

Question

Difficulty: MediumDefinition and Scope of Economics

A high school student in Ibadan receives an allowance of ₦10,000\text{₦}10,000 and must choose between purchasing a prescribed Economics textbook and attending a weekend tutorial class. She decides to buy the textbook. Within the scope of basic economic concepts, what does the unchosen tutorial class represent, and why?

  1. The opportunity cost, because it is the next best alternative foregone due to resource scarcity.Answer
  2. B
    The money cost, because it represents the monetary value of ₦10,000\text{₦}10,000 paid for the textbook.
  3. C
    An outward shift of the production possibility curve, because purchasing the textbook expands total societal resources.
  4. D
    The accounting cost, because it eliminates the basic economic problem of scarcity for the student.

Answer

The unchosen tutorial class represents the opportunity cost, as it is the real alternative foregone when limited financial resources are allocated to satisfy a preferred want.
The correct answer highlights that economics studies human behavior as a relationship between ends and scarce means with alternative uses. When a student chooses a textbook over a tutorial class, the sacrificed tutorial class represents the real alternative foregone, which is defined as opportunity cost.

Step-by-Step Solution

1
Identify the constrained resource and competing wants.
The student has a limited allowance of ₦10,000\text{₦}10,000 (scarcity) and two competing desires: buying a textbook or attending a tutorial.
Economic analysis begins with scarcity requiring choice.
2
Analyze the decision made and the alternative given up.
The student chooses the textbook, leaving the tutorial class unchosen.
Satisfaction of one want implies sacrificing another.
3
Relate the foregone option to economic definitions.
The sacrificed tutorial class is the opportunity cost (real cost) of acquiring the textbook.
Robbins and standard economic definitions state that economic behavior arises because resources are scarce and have alternative uses.

Key Concept

Definition and Scope of Economics - Scarcity, Choice, and Opportunity Cost
Estimated Time:1m 0s
Rate this question

Topics

Definition and Scope of Economics

More questions from this topic