Future Business Leader Achievments (FBLA) Economics Practice Exam

What is one opportunity cost associated with improving environmental quality?

1. Increased government intervention

2. More expensive goods and services

3. Reduced consumer choice

4. Higher unemployment rates

The correct answer is: More expensive goods and services

Focusing on the opportunity cost related to improving environmental quality highlights the trade-offs involved in such initiatives. When stricter environmental regulations are implemented or when businesses take steps to create more sustainable practices, the costs of production often rise. This is primarily due to the investment required for new technologies, cleaner processes, and compliance with regulations. As a result, companies may pass these increased costs on to consumers in the form of higher prices for goods and services. The concept of opportunity cost pertains to what is given up to achieve a certain benefit. In this case, the enhancement of environmental quality comes at the cost of affordability, leading to more expensive goods and services as businesses strive to meet these new standards while maintaining profitability. Thus, the correct answer reflects a key economic principle that improving one area may lead to increased costs in another, influencing consumer behavior and economic activity.