Table of Contents
- 1 Does specialization lower opportunity cost?
- 2 When the producer of a good or service has a lower opportunity cost?
- 3 Which situation is the best example of opportunity cost a country chooses to produce?
- 4 Why are producers with the lowest relative cost specialize?
- 5 How does specialization and trade increase total wealth?
Does specialization lower opportunity cost?
Countries become better at making the product they specialize in. Consumer benefits: Specialization means that the opportunity cost of production is lower, which means that globally more goods are produced and prices are lower. Consumers benefit from these lower prices and greater quantity of goods.
When the producer of a good or service has a lower opportunity cost?
Comparative advantage describes a situation in which an individual, business or country can produce a good or service at a lower opportunity cost than another producer.
Which situation is the best example of opportunity cost?
It is the important concept in economics and also the relationship which is between choice and scarcity. A good example of opportunity cost is you can spend money and time on other things but you can not spend time reading books or the money in doing something which can help.
What is it called when you choose one more of something?
forego one thing when you choose another. When you make a choice, you expect to benefit from it. Economists call this benefit “marginal benefit”.
Which situation is the best example of opportunity cost a country chooses to produce?
Here, the country has the option of whether to employ its resources to produce bananas or wheat. If it chooses to produce wheat, then the country’s revenue from selling bananas is its opportunity cost for selling wheat. Thus, the company has two alternatives to choose from, which is an example of opportunity cost.
Why are producers with the lowest relative cost specialize?
Opportunity The producer with the lowest relative ____________ cost has a comparative advantage and should specialize in the production of that good Varies Individuals and countries specialize because the opportunity cost of producing goods and services: Decreases As the amount of an activity increases, its marginal benefit:
Which is an example of the principle of opportunity cost?
A scarce resource used to satisfy one need means there is some other need that cannot be satisfied. Opportunity cost represents the highest-valued alternative foregone in making any choice. In this chapter we will use the principle of opportunity cost to justify the incentive individuals have to specialize in their labor.
What is the law of increasing opportunity cost?
Increasing, Opportunity The law of __________ opportunity cost says that because some resources are better suited to producing one good or service than another, as the production of a good or a service increases, the _________ cost of each additional unit rises. YOU MIGHT ALSO LIKE… Economic Fundamentals | Guide to Introductory Economics
How does specialization and trade increase total wealth?
We both have an incentive to specialize and trade. Trade increases total wealth by allowing a person to specialize in those products that he or she produces at a lower opportunity cost than others and trade for those goods that others produce at lower opportunity cost.