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S4 Economics: Opportunity Cost and the PPC – Challenge Practice (10 Questions)
S4 Economics: Opportunity Cost and the PPC – Challenge Practice (10 Questions)
Ten harder items cover money versus opportunity cost, sunk costs, hour-based conversion, rising marginal cost across adjacent segments, trade pushing consumption beyond the curve, and unemployment.
Quick answer 1. no, it is the value of the best forgone alternative; 2. a sunk cost, so ignore it; 3. 4 units of Y; 4. one third of a unit of X; 5. 2 units of X; 6. the marginal value differs by segment; 7. specialise by comparative advantage and exchange; 8. yes, with no technical progress; 9. yes, reaching (0 X, 55 Y); 10. every point on the curve has a cost.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 questions |
| Suggested time | about 30 minutes |
| Difficulty mix | Foundation 2 · Intermediate 2 · Challenge 5 · Error redo 1 |
| Chapter | Chapter: S4 Economics | Opportunity Cost and the PPC: scarcity, choice and growth |
| Level | S4 |
02 Questions (10 items)
- FoundationIs opportunity cost the same as the money paid?
- FoundationHow should a cost already paid and impossible to recover be treated?
- IntermediateOne unit of X takes 2 hours and one unit of Y takes 5 hours. What is the opportunity cost of 10 extra units of X in units of Y?
- IntermediateBoth (30 X, 0 Y) and (20 X, 30 Y) lie on the curve. What is the opportunity cost of one more unit of Y in units of X?
- ChallengeMoving on the same curve from (20 X, 30 Y) to (0 X, 40 Y), what is the opportunity cost of one more unit of Y?
- ChallengeWhy can average opportunity cost between two points not be used when the curve is bowed?
- ChallengeHow does international trade let consumption go beyond the production possibility curve?
- ChallengeAfter a war many workers are unemployed. Can output rise just by removing unemployment, without technical progress?
- ChallengeAn economy moves from (30 X, 0 Y) to (20 X, 30 Y) and then trades 20 units of X for 25 units of Y. Can consumption exceed the curve?
- Error redoA student says production on the curve involves no opportunity cost. What is wrong?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | No. It is the value of the best forgone alternative, and money is only one way to measure it. | The same sum of money buys different things, so the opportunity cost differs. |
| 2 | It is a sunk cost and should not affect the marginal decision ahead. | Decide by comparing future benefits and costs, since the money already spent does not change with the choice. |
| 3 | 4 units of Y, because 10 times 2 gives 20 hours and 20 divided by 5 is 4. | Use labour hours as the common unit: total the hours, then convert into the other good. |
| 4 | One third of a unit of X, about 0.33, since 10 units of X are given up for 30 units of Y. | When the question asks per unit of Y, divide the X forgone by the Y gained. |
| 5 | 2 units of X, because 20 units of X are given up for only 10 units of Y. | Rising from 0.33 to 2 shows increasing marginal opportunity cost, which is why the curve is bowed. |
| 6 | Because the marginal cost differs along each segment, and an average hides the rising trend. | An average describes a whole move but cannot stand in for the marginal value at a point. |
| 7 | Countries specialise according to comparative advantage and then exchange, so the consumption bundle can lie outside the curve. | Production still obeys the domestic curve, but exchange widens the bundles available for consumption. |
| 8 | Yes, by moving from a point inside the curve onto it, with no technical progress needed. | Unemployment means resources are idle, so putting them back to work raises output on its own. |
| 9 | Yes, it can consume (0 X, 55 Y), which is more than the domestic maximum of 40 units of Y. | Trade pays when the world exchange rate beats the domestic marginal opportunity cost. |
| 10 | Every point on the curve carries an opportunity cost, namely the other good given up. | Efficiency means nothing is wasted, which is not the same as having no trade-off. |
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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