Practise MYP Individuals & Societies questions on 2.2 Opportunity Cost and review the explanations to check your understanding.
Use these questions for topic practice and to find ideas you want to revisit in your notes or lessons.
In one day, Mexico can produce either 350 avocados or 70 blenders. Panama can produce either 150 avocados or 50 blenders. Mexico can produce more of both goods. However, Panama might still benefit from trade because it has a lower opportunity cost in producing:
Why does consumer surplus typically increase when a country moves from 'no trade' to 'free trade' with a lower world price?
True or False: When a country moves from a state of no trade to free trade with a lower world price, domestic producer surplus typically increases.
A firm is considering investing in new machinery. Which of the following best describes the opportunity cost of this investment?
True or False: A flatter Production Possibilities Frontier (PPF) slope relative to the horizontal axis indicates a lower opportunity cost for the good plotted on the horizontal axis.
Both goods
Blenders
Avocados
Neither good
Consumers can purchase a higher quantity of goods at a lower price
The government provides subsidies to all domestic buyers
Domestic producers can charge higher prices to consumers
The variety of goods available in the market decreases
True
False
True
False
The depreciation of the machinery over time
The interest rate paid on the loan for the machinery
The total sales revenue generated by the new machinery
Other potential projects the firm cannot fund due to this investment
