Economic Systems/Opportunity Costs Worksheet
Part I: Using the definitions of the following types of economies, match the statement to the proper type of economy.
Command Market Mixed
1. Everyone knows which role to play.
2. The primary weakness is dealing with the FOR WHOM question.
3. The type of economy where a central authority makes all of the decisions.
4. The strength of this economy is the ability to make a quick and decisive change in a short period of time.
5. People and firms act in their own best interests.
6. Economy where life is stable, predictable, and continuous.
7. Everyone is able to think for themselves and have their own voice.
8. “You must sacrifice for the good of the State.”
9. This economy discourages new ideas or ways of thinking.
10. A weakness of this economy is that is rewards only productive resources.
11. All economies today are not pure; they are this type of economy.
12. Economy based on the “Laissez Faire Economics” principle.
Part II: Read and solve each of the following scenarios. Your solution must include identification of the opportunity costs and who will be the bearer of the costs.
13. By taking an airplane one can go from Detroit to Chicago in one hour. The same trip takes five hours by bus. If the airfare is $30 and the bus fare is $10, which one is the cheaper mode of transportation for:
a) Someone who could earn $2 per hour?
b) For someone who could earn $10 per hour?
14. Many Americans today are much more “pressed for time” than were their grandparents. This fact is rather odd considering that today’s homes and workplaces are full of so many time saving devices to which our grandparents had no access. How would you account for this fact?
15. Explain why the rate of divorce among show business celebrities is so high using the concept of opportunity costs.
16. What is the cost per ticket to a professional baseball club that offers 50 free tickets to an orphanage? Does it matter for what game the tickets are offered? Why would it probably cost the ball club more to give the tickets to college students that to poor orphans?