You Own a Car and Are Trying to Decide Whether

question 84

Multiple Choice

You own a car and are trying to decide whether to trade it in and buy a new car.Which of the following costs is an opportunity cost in this situation?

• A)The trip to Europe that you will not be able to take if you buy the car
• B)The cost of the car you are trading in
• C)The cost of toothpaste and soap that you need for the next few months
• D)The cost of your meals for the last week

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Definitions:

World Price

The international market price of a good or service, determined by world demand and supply.

Domestic Price

The price of goods or services within a country's borders.

Efficient Nation

A country that utilizes its resources in the most productive way possible, maximizing output and welfare with minimal waste.

Comparative Advantage

The capacity of a person, business, or nation to provide a product or service with a smaller opportunity cost compared to rival entities.