High School Economics Quiz: Opportunity Cost
20 questions · exam conditions
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Opportunity CostQuestion 1 of 20

An individual has $500 to either spend on a new tablet or invest in a stock. If they buy the tablet, they receive $500 of immediate utility. If they invest in the stock, they expect it to be worth $550 in one year. This individual is indifferent between receiving $500 today and receiving $525 in one year. What is the opportunity cost of buying the tablet?

The $550 the stock is expected to be worth in one year.
The $525 future value the individual considers equal to $500 today.
The $50 expected profit from the stock investment.
The $25 difference between the stock's value and their indifference point.
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High School Economics Quiz

High School Economics Quiz: Opportunity Cost

Practice Opportunity Cost in High School Economics with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Opportunity Cost, giving you a quick way to practice the rules, question types, and explanations that matter most for High School Economics.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

An individual has $500 to either spend on a new tablet or invest in a stock. If they buy the tablet, they receive $500 of immediate utility. If they invest in the stock, they expect it to be worth $550 in one year. This individual is indifferent between receiving $500 today and receiving $525 in one year. What is the opportunity cost of buying the tablet?

  1. The $550 the stock is expected to be worth in one year. (correct answer)
  2. The $525 future value the individual considers equal to $500 today.
  3. The $50 expected profit from the stock investment.
  4. The $25 difference between the stock's value and their indifference point.
Explanation: The opportunity cost is the value of the next-best alternative given up. By choosing to buy the tablet, the individual forgoes the opportunity to invest in the stock. The value of that forgone opportunity is the expected future value of the stock, which is 550.Theindividual′sindifferencepoint(550. The individual's indifference point (525) is used in their personal cost-benefit analysis to decide which option they prefer, but it does not change the objective value of what is being given up.

Question 2

A recent college graduate has two job offers. Job A is in their hometown and pays an annual salary of $55,000. Job B is in a more expensive city, pays $70,000, but would require an additional $12,000 per year in living expenses compared to their hometown. The graduate considers the non-monetary aspects of both jobs to be equal. What is the opportunity cost of choosing Job A?

  1. The $70,000 gross salary of Job B.
  2. The $58,000 net financial value of Job B. (correct answer)
  3. The $15,000 difference in salary between the two jobs.
  4. The $12,000 in additional living expenses for Job B.
Explanation: The opportunity cost of choosing Job A is the net value of the forgone alternative, Job B. To find the true value of Job B, we must subtract its additional costs from its salary. The net financial value of Job B relative to Job A is $70,000 (salary) - $12,000 (additional costs) = $58,000. This is the value of the alternative given up when choosing Job A.

Question 3

A city government receives a $10 million grant for public works. The city can use the money to either build a new bridge or expand the public library system. After extensive study, it is determined that the two projects would provide roughly equal social benefits. The city council chooses to build the bridge. The opportunity cost of this decision is best described as:

  1. The future maintenance costs associated with the new bridge.
  2. Zero, because the money was a grant and did not come from local taxes.
  3. The social benefits forgone by not expanding the public library system. (correct answer)
  4. The $10 million used to construct the new bridge.
Explanation: Opportunity cost is the value of the next-best alternative. In this case, the choice was between the bridge and the library expansion. By choosing the bridge, the city gave up the benefits it would have received from the library expansion. The $10 million is the accounting cost, not the opportunity cost. The source of the funds (a grant) does not eliminate the opportunity cost, as the resources still could have been used for another purpose.

Question 4

A baker owns her own shop and has been offered a job as a head pastry chef at a large hotel for $80,000 per year. She chooses to continue operating her own shop. Her shop generates $250,000 in annual revenue, and she incurs $165,000 in explicit costs for ingredients, utilities, and one part-time employee. What is the baker's economic profit from operating her shop?

  1. An economic profit of $85,000.
  2. An economic profit of $5,000. (correct answer)
  3. An economic loss of $80,000.
  4. An accounting profit of $165,000.
Explanation: This is a multi-step problem. First, calculate the accounting profit: Revenue - Explicit Costs = $250,000 - $165,000 = $85,000. Next, identify the opportunity cost, which is the implicit cost of the baker's time. By running her shop, she forgoes the $80,000 salary from the hotel job. Finally, calculate economic profit: Accounting Profit - Opportunity Costs = $85,000 - $80,000 = $5,000. Her economic profit is $5,000.

Question 5

A student has a free Saturday and is considering three mutually exclusive options. They can work at a part-time job and earn $120. They can attend a concert for which they would have been willing to pay $100, but the ticket costs $30. Or, they can help a neighbor with yard work, an activity they value at $80.

  1. the $120 from the part-time job.
  2. the $80 value from helping the neighbor. (correct answer)
  3. the $70 net value from attending the concert.
  4. the combined value of the two other activities, $200.
Explanation: To find the opportunity cost, one must first determine the value of each alternative. The job is worth $120. Helping the neighbor is worth $80. The concert's net value is the willingness to pay minus the cost, which is $100 - $30 = 70.Ifthestudentchoosestowork(thehighest−valueoption),theopportunitycostisthevalueofthe∗next−best∗alternative.Comparingtheremainingoptions,helpingtheneighbor(70. If the student chooses to work (the highest-value option), the opportunity cost is the value of the *next-best* alternative. Comparing the remaining options, helping the neighbor (80) is more valuable than the concert ($70). Therefore, the opportunity cost of working is the $80 forgone from helping the neighbor.

Question 6

A company invested $5 million in a factory to produce a specific type of widget. A year later, before production begins, a competitor releases a superior widget, causing the market price and expected revenue for the company's widget to fall. The company now must decide whether to spend an additional $2 million on marketing to launch its product. The original $5 million is non-recoverable. The company's best alternative use for the $2 million marketing budget is to invest it and earn a return of $2.2 million.

  1. The $7 million total investment in the factory and marketing.
  2. The $5 million already invested in building the factory.
  3. The $2.2 million return from the next-best investment. (correct answer)
  4. The potential revenue lost to the new competitor.
Explanation: The opportunity cost is the value of the next-best alternative forgone when making a decision. The $5 million already spent is a sunk cost and is irrelevant to the decision to spend the additional $2 million. The decision is whether to spend the $2 million on marketing or use it for its next-best alternative. The problem states that the next-best alternative is an investment that yields $2.2 million. Therefore, the opportunity cost of spending the $2 million on marketing is the $2.2 million return forgone from the alternative investment.

Question 7

A consultant charges $150 per hour for her services. She is considering taking a day off to attend a professional development workshop. The workshop runs for 8 hours and has a registration fee of $400. What is the total opportunity cost of her attending the workshop?

  1. The $400 registration fee.
  2. The $1,200 in lost consulting fees.
  3. The $1,600, including the fee and lost income. (correct answer)
  4. The $800 difference between lost income and the fee.
Explanation: The total opportunity cost is the sum of the explicit and implicit costs of a decision. The explicit cost is the out-of-pocket expense for the workshop, which is the $400 registration fee. The implicit cost is the income she forgoes by not working, which is 8 hours * $150/hour = $1,200. Therefore, the total opportunity cost is $400 + $1,200 = $1,600.

Question 8

A country is operating on its production possibilities frontier. It can produce 1,000 units of consumer goods or 400 units of capital goods. If it decides to increase its production of capital goods from 100 units to 120 units, what is the opportunity cost of this change?

  1. 20 units of capital goods.
  2. 50 units of consumer goods. (correct answer)
  3. 80 units of consumer goods.
  4. 2.5 units of consumer goods.
Explanation: First, determine the trade-off ratio between the two types of goods. The opportunity cost of producing 400 capital goods is 1,000 consumer goods. So, the cost of 1 unit of capital goods is 1,000 / 400 = 2.5 units of consumer goods. The country is increasing capital good production by 20 units (from 100 to 120). The opportunity cost is the increase in production multiplied by the per-unit cost: 20 capital goods * 2.5 consumer goods/capital good = 50 consumer goods.

Question 9

A company is considering launching a new product. It has already spent $250,000 on research and development. To launch the product, it must spend an additional $100,000 on manufacturing and marketing. The company expects to earn $120,000 in revenue from the product. The company's next-best alternative for the $100,000 is to upgrade existing equipment, which is expected to generate $110,000 in cost savings. What is the opportunity cost of launching the new product?

  1. The $110,000 in cost savings from the forgone equipment upgrade. (correct answer)
  2. The $350,000 total spent on research, manufacturing, and marketing.
  3. The $100,000 cost of manufacturing and marketing.
  4. The $240,000, which is the total cost minus the alternative's value.
Explanation: The $250,000 spent on R&D is a sunk cost and irrelevant to the decision. The decision is how to use the additional $100,000. The choice is between launching the product or upgrading equipment. The opportunity cost of launching the product is the value of the next-best alternative forgone. In this case, the forgone alternative is the equipment upgrade, which would have generated $110,000 in value (cost savings). Thus, the opportunity cost is $110,000.

Question 10

A team has three employees who can be assigned to one of two tasks: sales calls or data entry. In one hour:

  • Ali can make 10 sales calls or complete 100 data entries.
  • Beth can make 8 sales calls or complete 96 data entries.
  • Carlos can make 12 sales calls or complete 96 data entries. To minimize the team's opportunity cost in terms of lost sales calls, who should be assigned to complete a task of data entry?
  1. Ali, who gives up 1 sales call for every 10 data entries.
  2. Beth, because she is the least productive at making sales calls.
  3. Carlos, who gives up 1 sales call for every 8 data entries.
  4. Beth, who gives up 1 sales call for every 12 data entries. (correct answer)
Explanation: The goal is to find who has the lowest opportunity cost for data entry, measured in forgone sales calls. Calculate the cost for each employee:
  • Ali: 100 data entries / 10 calls = 10 data entries per call. The cost of 1 data entry is 0.1 calls.
  • Beth: 96 data entries / 8 calls = 12 data entries per call. The cost of 1 data entry is ~0.083 calls.
  • Carlos: 96 data entries / 12 calls = 8 data entries per call. The cost of 1 data entry is 0.125 calls. Beth gives up the fewest sales calls for each data entry completed (or gets the most data entries per call given up). Therefore, she has the lowest opportunity cost and should be assigned the data entry task.

Question 11

A student is halfway through a 4-year degree program. They have already paid $40,000 in non-refundable tuition. The remaining two years will cost $50,000. They receive a job offer that will pay $45,000 per year, which they could start immediately. If they complete their degree, they can expect to earn $60,000 per year. For the purposes of deciding whether to finish the degree, what is the opportunity cost of the next two years of college?

  1. $90,000, which is the forgone salary for two years.
  2. $130,000, which is the prior tuition plus the forgone salary.
  3. $140,000, which includes future tuition and two years of forgone salary. (correct answer)
  4. $180,000, which is the total cost of tuition plus forgone salary.
Explanation: The decision is forward-looking. The $40,000 already paid is a sunk cost and irrelevant. The opportunity cost of finishing the degree has two components. The explicit cost is the future tuition of $50,000. The implicit cost is the salary forgone by staying in school for two more years, which is 2 years * $45,000/year = $90,000. The total opportunity cost is the sum of these costs: $50,000 + $90,000 = $140,000. The higher future salary is the benefit of the degree, not part of its cost.

Question 12

You are choosing between a summer internship that pays $4,000 and a summer travel program that costs $3,000. You value the travel experience at $8,000. A third option is to take summer classes, which cost $2,000 and which you value at $3,000. If you choose the travel program, what is your opportunity cost?

  1. The $4,000 salary from the internship. (correct answer)
  2. The $5,000 net value of the travel program.
  3. The $1,000 net value of the summer classes.
  4. The $7,000 combined value of the internship and the travel cost.
Explanation: First, evaluate the net value of each alternative. The internship's value is $4,000. The travel program's net value is $8,000 (value) - $3,000 (cost) = $5,000. The summer classes' net value is $3,000 (value) - $2,000 (cost) = 1,000.Therationalchoiceisthetravelprogramwiththehighestnetvalue(1,000. The rational choice is the travel program with the highest net value (5,000). The opportunity cost of this choice is the value of the next-best alternative forgone. Comparing the internship (4,000)andtheclasses(4,000) and the classes (1,000), the internship has the higher value. Therefore, the opportunity cost of traveling is the $4,000 forgone from the internship.

Question 13

A software engineer can spend an hour debugging code, which she values as a $100 contribution to her project. Alternatively, she could spend that hour in a training session that would increase her future annual earnings by $500, an option she values at $80 in present terms. Her third option is to spend the hour on administrative tasks, which she values at $40. What is the opportunity cost of her decision to spend the hour debugging code?

  1. The $80 present value of the training session. (correct answer)
  2. The $100 value of the work she performs.
  3. The $120 total value of the two forgone activities.
  4. The $500 increase in future annual earnings.
Explanation: The engineer chooses the activity she values most, which is debugging code ($100). The opportunity cost is the value of the next-best alternative she gives up. Comparing the other two options, the training session (present value 80)ismorevaluablethantheadministrativetasks(80) is more valuable than the administrative tasks (40). Therefore, the opportunity cost of debugging code is the $80 value of the forgone training session. The $500 is a future value and not directly comparable without discounting, which the problem does by providing the $80 present value.

Question 14

An entrepreneur is using a building she owns to run her business. The building could be rented out for $5,000 per month. The business earns $50,000 in monthly revenue and has $30,000 in monthly operating costs (e.g., supplies, wages). An economist would state that the monthly cost of running the business is:

  1. $20,000, which represents the accounting profit.
  2. $30,000, which represents the explicit operating costs.
  3. $35,000, which includes explicit costs and the implicit rental cost. (correct answer)
  4. $5,000, which represents the implicit cost of the building.
Explanation: An economist's calculation of cost includes both explicit (out-of-pocket) costs and implicit (opportunity) costs. The explicit costs are the $30,000 in operating expenses. The implicit cost is the value of the next-best alternative for the resources used, which in this case is the $5,000 in forgone rent from the building. The total economic cost is the sum of these: $30,000 + $5,000 = $35,000.

Question 15

A freelance writer can take on one of two projects. Project A pays $3,000 and will take 50 hours. Project B pays $3,500 and will take 70 hours. The writer's only other option is to work temporary jobs that pay $55 per hour, for which there is unlimited demand. The writer can only choose one of these three options. What is the opportunity cost of choosing Project B?

  1. The $3,000 payment from Project A.
  2. The $3,500 payment from Project B itself.
  3. The $2,750 that could be earned from temporary work.
  4. The $3,850 that could be earned from temporary work. (correct answer)
Explanation: The writer is choosing Project B. The opportunity cost is the value of the next-best alternative. We must compare the value of Project A and the value of doing temporary work for the same duration as Project B. Project A is worth $3,000. The temporary work is worth 70 hours * $55/hour = 3,850.Comparingthetwoalternatives(3,850. Comparing the two alternatives (3,000 vs. $3,850), the temporary work is the better alternative. Therefore, the opportunity cost of choosing Project B is the $3,850 forgone from not doing temporary work.

Question 16

Two friends, Maya and Liam, are given free tickets to a 3-hour concert. To attend, they both must give up a 3-hour shift at work, where they each would have earned $45. Maya loves the band and would have paid $100 for the ticket. Liam dislikes the band and considers the experience a nuisance equivalent to a $20 cost. Both choose to attend the concert. Which statement correctly identifies the opportunity cost?

  1. Maya's opportunity cost is $45, while Liam's is 65(65 (45 in lost wages plus the $20 nuisance cost).
  2. Maya's opportunity cost is zero because she values the concert more than the cost; Liam's is $45.
  3. Both Maya and Liam have an opportunity cost of $45. (correct answer)
  4. Maya's opportunity cost is higher than Liam's because she places a greater value on the concert.
Explanation: Opportunity cost is the value of the next-best alternative forgone. For both Maya and Liam, the explicit alternative they gave up was working a 3-hour shift and earning $45. Their personal feelings about the concert (the benefit or negative utility they receive) are not part of the opportunity cost itself; rather, these feelings are weighed against the opportunity cost to make a decision. Since both gave up the same alternative of earning $45, their opportunity cost is the same.

Question 17

You purchase a non-refundable, non-transferable ticket to a baseball game for $40. On the day of the game, a friend invites you to their house for a barbecue. You value the barbecue at $50. You value the experience of attending the baseball game at $60. What is the opportunity cost of choosing to go to the barbecue?

  1. The $100, which is the value of the game plus the ticket price.
  2. The $60 value you place on attending the baseball game. (correct answer)
  3. The $40 price of the non-refundable baseball ticket.
  4. The 20,whichisthenetvalueofthegame(20, which is the net value of the game (60) minus the ticket price ($40).
Explanation: The $40 paid for the ticket is a sunk cost; it cannot be recovered regardless of the decision and is therefore irrelevant to the opportunity cost calculation. The choice is between attending the game (valued at $60) and going to the barbecue (valued at $50). The opportunity cost of choosing the barbecue is the value of the next-best alternative that is forgone, which is the $60 value from attending the game.

Question 18

A small firm can produce either 80 chairs or 20 tables in a week. The firm is currently producing 60 chairs and 5 tables. To fulfill a new order, management decides to produce 2 additional tables. Assuming a constant opportunity cost, what is the opportunity cost of producing these 2 extra tables?

  1. 4 chairs.
  2. 8 chairs. (correct answer)
  3. 15 chairs.
  4. 20 chairs.
Explanation: First, calculate the opportunity cost of one table in terms of chairs. The firm can produce 80 chairs OR 20 tables, so the trade-off is 80/20 = 4 chairs per table. The decision is to increase table production by 2. The opportunity cost is the number of additional units multiplied by the per-unit opportunity cost: 2 tables * (4 chairs / table) = 8 chairs. The firm must give up production of 8 chairs to produce 2 additional tables.

Question 19

A recent high school graduate is deciding between accepting a full-time job that pays $30,000 a year and enrolling in a community college program that costs $5,000 in tuition and fees for the year. If the student chooses to enroll in college, what is their opportunity cost for the year?

  1. The $5,000 for tuition and fees.
  2. The $30,000 salary from the forgone job.
  3. The $35,000, representing both tuition and forgone salary. (correct answer)
  4. The $25,000 difference between the salary and the tuition.
Explanation: The opportunity cost of a decision includes both explicit costs and implicit costs. The explicit cost of attending college is the $5,000 for tuition and fees. The implicit cost is the value of the next-best alternative, which is the $30,000 salary from the job they must turn down. The total opportunity cost is the sum of these two costs: $5,000 + $30,000 = $35,000.

Question 20

A farmer can use a field to plant either wheat or corn. The expected revenue from wheat is $15,000 with costs of $4,000. The expected revenue from corn is $20,000 with costs of $8,000. The farmer chooses to plant corn. What is the opportunity cost of this decision?

  1. The $11,000 net profit that would have been earned from wheat. (correct answer)
  2. The $15,000 revenue that would have been generated by wheat.
  3. The $1,000 difference in profit between corn and wheat.
  4. The $8,000 cost required to grow the corn.
Explanation: The opportunity cost is the value of the next-best alternative forgone. First, calculate the net benefit (profit) of each option. For wheat: $15,000 (revenue) - $4,000 (costs) = $11,000. For corn: $20,000 (revenue) - $8,000 (costs) = $12,000. By choosing to plant corn, the farmer forgoes the opportunity to plant wheat. The value of that forgone opportunity is its net profit, which is $11,000.