Opportunity cost — common mistakes

When a question gives you figures, state the opportunity cost in those units: '$8 of wages' for a student who skips a shift, '200 houses' for a government that builds a hospital. 'The money' on its own never scores.

For a 6-mark 'analyse' question, define opportunity cost, apply it to the decision in the question, then show the trade-off on a PPC sketch with labelled axes. For an 8-mark 'discuss' question, add that the decision may still be worthwhile if the benefits exceed the alternative forgone.

No. It is the single next best alternative. If you spend an evening revising, the opportunity cost is the one thing you would most have liked to do instead — not every activity you missed.

No. A free good such as air is not scarce, so using it means giving nothing up. Goods made from scarce resources are economic goods and always carry an opportunity cost, even when they are handed out without charge.

Borrowing does not remove the cost — it delays it. The money repaid with interest in future cannot then be spent on other services, so the opportunity cost is simply moved to later years.