Activity 2.4
Question and Problems

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The following questions are designed to evaluate your understanding of scarcity, opportunity cost, and the factors of production. You may want to refer back to your Ben & Jerry's reading and the various tutorials provided in Activity 2.3 to help you formulate you answers.

Your answers should be in complete sentences using your own words. You must provide specific examples to support your answers.


1. The Introduction of Ben & Jerry's Double Dip gives the background of how Ben Cohen and Jerry Greenfield rose from being junior high buddies to the architects of a multi-million dollar ice cream business. From this reading, identify 5 important economic decisions this duo made that would ultimately lead them on their path of success. Along with identifying 5 important economic decisions that they made, identify and describe the opportunity cost of EACH of these decisions. What was the next best alternative that they had to give up based on their decisions? When identifying 5 important decisions that they made along with the associated opportunity costs, focus on the decisions that they had to make relating to issues such as what product to produce, where to sell it, how to sell it, etc.

(Remember, opportunity cost is the COST of the best alternative that you gave up in order to make the decision that you did. Suppose that I want to take my wife to dinner and buy a golf shirt but only have $30 to spend. I decide to take my wife to dinner (what a guy!). My opportunity cost would be the golf shirt. To me, it was the best alternative that I gave up.
Opportunity cost is not always a financial cost however. Suppose my boss asks me to go on a business trip to New York but clearly states that I don't have to go if I don't want to. For the good of the company, I decide to go. What was my opportunity cost? Well it could very well be the fact that I will be away from my wife and child for several days.)

2. Earlier in Activity 2.4, you reviewed the four factors of production. Identify these four factors of production and give some examples of each factor as it would relate to the making of Ben & Jerry's ice cream.

3. What was your last major purchase? (over $20) What was the opportunity cost of this purchase? Explain your answer..

4. Suppose it is Monday night and you decide to watch the football game on television for 3 hours. Watching TV does not cost you any money (let's assume here that your parents own the TV, pay the cable and electric bill). Does this mean that there is no opportunity cost for your decision to watch the football game? Explain your answer.

5. Instead of going to college after high school graduation, you decide to take a full-time job. What possible short term gains could there be for you if you made this decision? What opportunity costs would there be for you if you made this decision? Explain your answers.


Along with sending a copy of your work to your instructor, don't forget to place a copy in your portfolio.

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