Opportunity cost

High school (ages 12+)
Mathematics & Numbers

Name:

Date:

Step 1 · Read the article

Open the article and read it at the level above. Then answer the questions below in your own words.

https://smallwhale.org/articles/opportunity-cost

Write what each word means, using the article.

Do not copy the article. Write two things you learned, the way you would explain them to a friend.

Answers below are taken from the article’s stored facts, so they match what the student read.

1. What is the theoretical basis?Arises from the fundamental economic problem of scarcity and unlimited wants
2. What is the components of cost?Encompasses both explicit (monetary) and implicit (non-monetary) costs, including lost utility
3. Why do we need to think about opportunity cost?Thinking about opportunity cost helps us use our limited resources, like time and money, in the best way.
4. How does opportunity cost affect my choices?It shows what you lose, such as money or fun, when you pick one option instead of another.

Mutually Exclusive Alternatives: Choices where selecting one option prevents the selection of another.
Explicit Costs: Direct, out-of-pocket payments made by a firm or individual.
Implicit Costs: Costs that do not involve a direct payment but represent the value of forgone opportunities.