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S4 Economics: Opportunity Cost and the PPC – Foundation Practice (10 Questions)
S4 Economics: Opportunity Cost and the PPC – Foundation Practice (10 Questions)
Ten items move from the definition of opportunity cost and free versus economic goods to points on, inside and outside the curve, rising marginal cost and simple conversions.
Quick answer 1. the value of the best forgone alternative; 2. a free good has zero opportunity cost; 3. the lunch; 4. full and efficient use of resources; 5. resources not fully used; 6. unattainable with current resources; 7. rising marginal opportunity cost; 8. 12 sets of notes; 9. 480 tonnes of vegetables, 1.6 tonnes per tonne of rice; 10. only the best alternative counts.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 questions |
| Suggested time | about 20 minutes |
| Difficulty mix | Foundation 6 · Intermediate 2 · Challenge 1 · Error redo 1 |
| Chapter | Chapter: S4 Economics | Opportunity Cost and the PPC: scarcity, choice and growth |
| Level | S4 |
02 Questions (10 items)
- FoundationWhat is opportunity cost in economics?
- FoundationWhat distinguishes a free good from an economic good?
- FoundationWith only $50 you can buy a book or a lunch. If you choose the book, what is the opportunity cost?
- FoundationWhat does any point on a production possibility curve represent?
- FoundationWhat does a point inside the production possibility curve represent?
- FoundationWhat does a point outside the production possibility curve represent?
- IntermediateWhy is a production possibility curve usually bowed outward?
- IntermediateIn one hour you can produce either 4 sets of notes or 2 exercises. What is the opportunity cost of 6 exercises in sets of notes?
- ChallengeOn 100 hectares each hectare can grow either 5 tonnes of rice or 8 tonnes of vegetables. Moving 60 hectares from vegetables to rice, how many tonnes of vegetables are forgone, and what is the cost of one tonne of rice?
- Error redoA student says opportunity cost is the sum of all forgone alternatives. What is wrong?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | The value of the single best alternative that is given up. | Only the best forgone alternative counts, not the sum of everything given up. |
| 2 | A free good can be taken without sacrificing another choice, so its opportunity cost is zero; an economic good is scarce and carries a cost. | Ordinary air is a free good, while clean drinking water is an economic good. |
| 3 | The lunch. | The money paid is not the cost itself; the forgone use of the money is. |
| 4 | A combination produced with all resources fully and efficiently used, given current resources and technology. | Every point on the curve is efficient, so more of one good means less of the other. |
| 5 | Resources are not fully used, for example unemployment or inefficiency. | From inside the curve both goods can be increased at once without sacrificing either. |
| 6 | A combination that cannot be reached with current resources and technology. | Reaching such a point requires growth that shifts the curve outward first. |
| 7 | Because marginal opportunity cost rises: each extra unit of one good costs more of the other. | Resources are not perfectly transferable, so the best-suited resources are used first and later ones suit the job less well. |
| 8 | 12 sets of notes, since 6 divided by 2 gives 3 hours and 3 times 4 is 12. | Convert the exercises into hours first, then convert those hours into notes. |
| 9 | 480 tonnes of vegetables are forgone; one tonne of rice costs 1.6 tonnes of vegetables, from 60 times 8, 60 times 5 and 480 divided by 300. | Compare the two uses of the same land, then divide the forgone total by the output gained. |
| 10 | Only the highest-valued alternative counts; lower-valued options are excluded. | Adding every forgone option overstates the cost, which is a common definition error. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
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