1. Scarcity, Trade-offs, and Opportunity Cost

2. Which describes scarcity?
A. A condition where supply exceeds demand.
B. The situation that exists when there is
temporarily a shortage of a good or service.
C. Unlimited wants exceeding limited resources.
D. An unlimited demand for goods and services.

3. 2. Opportunity costs is MOST RELATED to which concept?
A      price floors
B       scarcity
C      elasticity
D      absolute advantage

4. 3. Opportunity cost is best described as the A sum of all production costs B most expensive resource used in production C value of the best alternative forgone when a choice is made D monetary value of all alternatives forgone when a choice is made

5. 4. If Jim chooses job A, he will recieve $50,000 a year, full benefits and 2 weeks of paid vacation.  If he chooses job B he will recieve $60,000 a year, full benefits and no paid vacation.  Assuming Jim chooses job B, which statement is correct.
A      Jim has incurred no opportunity cost because the jobs were completely different.
B       Jim's opportunity cost is only the $50,000 he could have gotten at the other job.
C      Jim's opportunity cost is everything he gave up at job A.
D      Jim's opportunity cost is everything he is gaining at job B.