Quizzol

QUESTION:

Hubert is training for a biathlon, a winter racing sport that combines cross-country skiing and rifle shooting.

Consider the following scenario: In order to ski for one hour, Hubert must take that time off of work, where he earns an hourly wage of $19. Additionally, there is a $8 entrance fee to the skiing facility.

Which basic principle of individual choice do these statements best illustrate?

People usually exploit opportunities to make themselves better off.

The cost of something is what you give up to get it.

Markets are usually a good way to organize economic activity.

Trade can make everyone better off.

ANSWER:

Which basic principle of individual choice do these statements best illustrate?

People usually exploit opportunities to make themselves better off.

The cost of something is what you give up to get it.

Markets are usually a good way to organize economic activity.

Trade can make everyone better off.

Explanation

All choices have opportunity costs. The opportunity cost of a good or service measures what must be given up in order to obtain it.

In this case, Hubert is not only paying $8 for admission to the skiing facility, but he is also giving up the $19 he could have earned by working instead of skiing. In this sense, the $8 price of admission alone does not capture what must be given up to ski. Hubert must give up

$8 + $19 = $27

, which represents the opportunity cost of skiing.

Posted by Cleveland on August 28, 2024