Which of the Following Choices Correctly Illustrates How Changes in Opportunity

question 228

Multiple Choice

Which of the following choices correctly illustrates how changes in opportunity costs affect supply?

• A) A farmer produces corn and wheat. The price of wheat rises, so he shifts his resources toward wheat and the supply of wheat rises.
• B) A fisherman fishes for lobsters and oysters. The price of lobsters rises, so he decides to spend more of his time fishing for oysters because he can make the same amount of money with fewer lobsters.
• C) A textbook for economics becomes cheaper, so more students opt to buy that particular textbook.
• D) Milk and cereal are complementary goods, so when the price of cereal falls, the quantity supplied of milk rises.

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Definitions:

Household Budget

A budgeting strategy that distributes anticipated personal earnings into categories for spending, saving, and paying off debts.

Price Elasticity

An assessment of the sensitivity of the demand for an item to shifts in its cost.

Strawberry Ice Cream

A frozen dessert made from dairy ingredients such as milk and cream, sweetened and flavored with strawberries.

Price-elastic

A characteristic of a good or service indicating a high sensitivity to changes in its price, where a small price change leads to a significant change in quantity demanded or supplied.