Saturday. Shift at work, or revise?: Pick one and the other is gone.
The one you gave up is the opportunity cost — the next best thing, not everything else you could have done.
Three quick ones
- Government builds a hospital → the school it didn't build.
- You revise Saturday → the shift you turned down.
- A farmer plants wheat → the barley that land could have grown.
The trap — naming the price: "The opportunity cost of the hospital is €50 million."
No. That is the price.
The cost is what that money would otherwise have bought. Name the thing, not the number.
Trade-off or opportunity cost?: Trade-off — the swap you face. More of one thing means less of another.
Opportunity cost — the one thing you actually gave up.
You revise instead of taking the shift. The trade-off is better marks against more money. The opportunity cost is the shift.
A government builds a hospital instead of a school. The trade-off is healthcare against education. The opportunity cost is the school.
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Almost nothing is actually free: A free good costs nobody anything — there is enough for everyone. Air to breathe.
Everything else is an economic good: scarce, so using it costs something.
Free good
- Not scarce — enough for all.
- No opportunity cost.
- Needs no resources to supply.
- Air to breathe. And not much else.
Economic good
- Scarce — not enough to go round.
- Has an opportunity cost.
- Needs land, labour or capital.
- Food, housing, clean water — nearly everything.
"Free" in everyday English is a different word: Bottled water is not a free good — collecting, cleaning and shipping it all use resources.
Free school meals are not either. Free to you. Someone still paid.
And polluted air stops being free the moment cleaning it costs something.
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Opportunity cost keeps earning marks after Unit 1: No paper has asked for it by name. It still earns marks everywhere else.
Every policy has a downside, and opportunity cost is the name for it — so it turns up inside bigger questions all through the course.
IB-style questionExplain[4 marks]
A government uses a plot of public land to build a new hospital.
Explain the opportunity cost of this decision.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.