GCSE Economics Revision: Opportunity cost (With Mock Questions!)
👋 Hey there, future economists!
Let’s dive into one of the key topics for your GCSE Economics exam—opportunity cost. Don’t worry, we’ll keep it simple, practical, and fun, while also getting you exam-ready with some mock questions. Ready? Let’s go!
What is Opportunity Cost?
In Economics, opportunity cost is all about choices. Every time you make a decision, you’re giving something up. It’s the value of the next best alternative you miss out on when making a decision. So, if you choose to buy a new phone instead of saving that money for a holiday, your opportunity cost is the holiday!
Economics is really about weighing those choices—how we use our limited resources like time and money to get the best outcome. You’ll need to know how to identify and explain opportunity costs for your exam.
Key Learning Items:
📝 What you need to understand:
- Opportunity cost is everywhere—it's about the trade-offs we face in everyday decisions.
- It applies to individuals, businesses, and governments when making choices.
- Be able to analyze scenarios and explain what is given up (the opportunity cost).
- Understand how opportunity cost links to concepts like scarcity and resource allocation.
What You Need to Demonstrate:
To ace this section in your exam, you’ll need to:
1️⃣ Explain what opportunity cost means in clear, simple terms.
2️⃣ Identify the opportunity cost in real-world scenarios or examples.
3️⃣ Show how opportunity cost helps with decision-making, especially when resources are limited.
Key Things to Remember Before the Exam:
🧠 Always think about trade-offs! When you see a question, ask yourself: "What's the next best option being sacrificed?"
💡 Context matters—remember, opportunity cost isn't just about money. Time, effort, and resources also count.
🎯 Use examples! A great way to show your understanding is to provide examples, whether it’s about spending choices, production decisions, or government policies.
Mock Questions:
Q1 - Which of the following best describes the concept of opportunity cost?
a) The money you spend on goods and services
b) The value of the next best alternative that you give up
c) The total cost of a product
d) The price difference between two goods
Q2 - If a company chooses to produce laptops instead of smartphones, the opportunity cost is:
a) The profit made from the laptops
b) The smartphones they didn’t produce
c) The cost of the raw materials
d) The wages paid to workers
Q3 - Which of the following is not an example of opportunity cost?
a) Choosing to study instead of watching TV
b) Buying a new car instead of saving for a house
c) Drinking water instead of soda when both are free
d) Spending time with friends instead of revising for exams
Q4 - A government decides to spend more on healthcare rather than building new schools. The opportunity cost is:
a) The cost of healthcare
b) The new schools not being built
c) The jobs created in healthcare
d) The taxes collected from businesses
Q5 - Which of these statements is true about opportunity cost?
a) It applies only to financial decisions
b) It is always a fixed amount
c) It is the cost of giving up the next best alternative
d) It is only relevant to individuals, not businesses or governments
To check your answers and see more questions check out our GCSE Economics Multiple-Choice booklet, with 250 sample questions and answers for you to revise
Good luck with your revision! You're going to smash it. Keep practicing, keep applying what you’ve learned, and keep thinking like an economist!