With a Budget of $500 000,a School Board Can Choose

question 52

Multiple Choice

With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms. FIGURE 1-2
-Refer to Figure 1-2.Suppose the school board chooses to allocate all $500 000 to the purchase of laptop computers.What is the opportunity cost of this entire purchase?

• A)The opportunity cost is 2000 laptops.
• B)The opportunity cost is 20,000 textbooks.
• C)The opportunity cost is uncertain.
• D)The opportunity cost is $0.
• E)There is no opportunity cost because the purchase was made within the available budget.

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Definitions:

Saving

The portion of income not spent on consumption or taxes, typically put aside for future use or investment.

Potential GDP

Potential GDP refers to the maximum output an economy can produce without triggering inflation, if all resources are fully employed.

Full-employment GDP

Full-employment GDP is the maximum potential output an economy can produce when all resources, including labor, are fully utilized without causing inflation.

Capitalist Economy

A financial system where capital goods are owned by individuals or corporations, with investment choices, prices, production, and goods distribution primarily influenced by competition within a free market.