Opportunity cost practice problems become much easier when you write down exactly what is gained, what is given up, and the units attached to both numbers. A correct fraction with the wrong units is still the wrong answer. This worksheet walks through everyday choices, production tables, comparative advantage, and a short mixed quiz so you can practice the decisions behind the arithmetic.
Use it before your first economics quiz or while rebuilding the basics for a midterm. The examples are original practice scenarios, not questions from a course exam. Work on paper, cover each answer before trying the problem, and keep a separate list of mistakes. You can pair the worksheet with your lecture definitions and StudyUpload’s economics notes guide.
The rule to write above your worksheet
Opportunity cost is the value of the next best alternative you give up when you make a choice. For a production problem, the opportunity cost per unit is the quantity of the other good sacrificed divided by the quantity of the chosen good gained. Write the units beside that division before entering anything into a calculator.
For example, giving up 12 sandwiches to produce 4 salads means a cost of 3 sandwiches per salad. It does not mean 3 salads per sandwich. OpenStax’s explanation of comparative advantage connects this tradeoff to specialization: the producer with the lower opportunity cost has comparative advantage in that good.
Problem 1: Identify the alternative before calculating
You have a free Saturday afternoon. Your realistic options are a campus work shift paying $64, helping at a club event you value at $35, or attending a free workshop you value at $50. Assume those dollar values represent your full valuation of each option and there are no extra costs. You choose the workshop. What is the opportunity cost?
Worked answer
The next best alternative is the $64 work shift, so the workshop’s opportunity cost is $64. Do not add $64 and $35. You could not attend the club event and work the same afternoon, so adding both alternatives counts benefits you could never have received together.
In a real decision, enjoyment, travel, fatigue, and other considerations could change the ranking. Here, use the assumptions supplied by the question. On your worksheet, write three lines: chosen option, next best option, value forgone. If the prompt does not rank the alternatives or provide enough information to rank them, explain what information is missing.
Problem 2: Separate a past payment from today’s choice
You paid $18 last week for a nonrefundable event ticket that cannot be sold or transferred. Today you can attend the event or accept a two-hour work shift paying $17 per hour. Assume attending has no extra monetary cost. What earnings do you give up by attending, and should you add the old ticket payment to those forgone earnings?
Worked answer
The forgone earnings are 2 times $17, or $34. The $18 payment cannot change under either option, so it is a sunk cost for today’s decision. Do not add it to the incremental earnings sacrificed. If a new $6 bus fare were required only for attending, that would be an additional current expense when comparing the alternatives.
Label your answer carefully: $34 is the forgone earnings in the stated scenario. It is not a complete measurement of every personal benefit or cost of attending. This distinction prevents an exam answer from claiming more than the problem’s assumptions support.
Problem 3: Calculate costs from an output table
In one afternoon, Maya can produce either 12 posters or 24 flyers. Leo can produce either 8 posters or 24 flyers. Assume each person can divide the afternoon between the two activities at a constant rate. Find each person’s opportunity cost of one poster and identify who has comparative advantage in posters.
Worked answer
Maya gives up 24 flyers to make 12 posters. Her cost is 24 divided by 12, or 2 flyers per poster. Leo gives up 24 flyers to make 8 posters. His cost is 24 divided by 8, or 3 flyers per poster. Maya has comparative advantage in posters because 2 is less than 3.
Now reverse the question. Maya’s cost of one flyer is one-half of a poster. Leo’s cost is one-third of a poster. Leo has comparative advantage in flyers. Write the two goods in the same order for both people; comparing flyers per poster with posters per flyer produces a meaningless ranking.
Problem 4: Handle a table measured in time
Asha needs 2 hours to make a model and 30 minutes to make a diagram. Ben needs 3 hours to make a model and 1 hour to make a diagram. Who gives up fewer diagrams when making one model?
Worked answer
Put every time in hours first. Asha’s diagram takes 0.5 hours. During the 2 hours required for one model, she could make 2 divided by 0.5, or 4 diagrams. Ben could make 3 divided by 1, or 3 diagrams during the time required for his model. Ben has comparative advantage in models.
Asha is faster at both tasks, but that does not give her comparative advantage in both. Her absolute speed and her relative sacrifice answer different questions. For a time table, ask what else fits into the time used by the chosen product. For an output table, ask how much alternative output is sacrificed. Use the story to construct the fraction.
Problem 5: Read changes along a production schedule
A small workshop has these efficient weekly combinations: A produces 0 chairs and 30 shelves; B produces 2 chairs and 28 shelves; C produces 4 chairs and 22 shelves; D produces 6 chairs and 12 shelves. Calculate the shelf cost per extra chair for each move between neighboring combinations.
Worked answer
From A to B, the workshop loses 2 shelves and gains 2 chairs, so the cost is 1 shelf per chair. From B to C, it loses 6 shelves and gains 2 chairs, so the cost is 3 shelves per chair. From C to D, it loses 10 shelves and gains 2 chairs, so the cost is 5 shelves per chair.
The costs increase across those intervals. The cost of moving from A all the way to D is 18 shelves for 6 chairs, an average of 3 shelves per chair. That average does not answer a question about the final two chairs. Circle the starting and ending combinations specified in the prompt before subtracting.
Problem 6: Check a proposed trade
Return to Maya and Leo. Maya’s poster costs 2 flyers, while Leo’s poster costs 3 flyers. Suppose Maya offers Leo one poster in exchange for 2.5 flyers. Under the constant-rate assumptions and with no transaction costs, is that exchange better than making the traded good themselves?
Worked answer
Maya gives up a poster that costs her 2 flyers and receives 2.5 flyers, a gain of 0.5 flyer relative to that production tradeoff. Leo receives a poster for 2.5 flyers instead of sacrificing 3 flyers to make it, saving 0.5 flyer. Both improve on their own production costs for that exchange.
If fractional flyers feel awkward, multiply the exchange by two: 2 posters for 5 flyers. At exactly 2 flyers per poster, Maya is indifferent on production cost alone. At exactly 3, Leo is indifferent. A price strictly between their costs creates a strict gain for both in this simplified example.
A mixed quiz to finish without the answers
- A printer can make 40 cards or 10 banners in an hour at constant rates. What is the cost of one banner in cards?
- You choose a seminar over your next best option, a $45 work shift. A third option is a walk you value at $20. Which alternative determines the opportunity cost?
- A farm moves from 20 crates of beans and 8 crates of carrots to 14 crates of beans and 11 crates of carrots. What is the bean cost per additional carrot crate?
- Nora needs 4 hours for an illustration and 1 hour for a logo. What is the opportunity cost of one illustration?
Answer check
The answers are 4 cards per banner; the $45 work shift; 2 bean crates per carrot crate; and 4 logos per illustration. For question three, use the changes: 6 bean crates sacrificed divided by 3 carrot crates gained. Dividing the final totals, 14 by 11, would describe neither the change nor its opportunity cost.
Turn mistakes into a useful study document
Create a page with four columns: problem type, my setup, corrected setup, and reason for the correction. Use specific labels such as reversed units, added incompatible alternatives, mixed minutes with hours, or used totals instead of changes. A precise label tells you what to check next time.
Try the missed problem again tomorrow with different numbers. UNC’s Learning Center recommends active study and practice spaced across days. Apply that advice here by solving before looking, explaining the fraction aloud, and returning to errors in a later session.
For additional course material, explore economics resources or browse study documents. Match any notes to your instructor’s terminology and check worked answers yourself. Students should upload their own notes to help other students. An original worksheet with units, assumptions, and corrected reasoning is especially useful; share only material you have permission to distribute.
Frequently asked questions
Does opportunity cost have to be money?
No. These exercises measure it in flyers, shelves, time-related output, and forgone earnings. The units depend on the alternative sacrificed. State those units in the final answer.
Why do I keep getting the reciprocal answer?
You may be dividing before naming the requested good. Write “cost of one poster in flyers” first. Flyers belong in the numerator and posters in the denominator for that question.
Should I always use the endpoints of a production table?
No. Use the combinations named in the problem. Endpoints can give an average across a long move, while a question about the next unit or interval needs the relevant local change.
How do I know I am ready for a quiz?
Mix everyday-choice, output-table, time-table, and production-change problems. You are making progress when you can select a setup without a model answer and explain why the other plausible fraction would answer a different question.