Question

Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500. Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A. $36500B. $56500C. $65500D. $72500

Answer 1

Answer:

$56,500

Explanation:

Opportunity cost is the cost of doing the next best alternative.

In this regard The Opportunity cost of going to College this term will then be,

Total Net Cost of going to college =28,000+9,000+2,500-16,000 =$23,500

This is the total cost net of any benefit.

The Net benefit of not going to college in this case will be.

Net benefit of not going = 42,000 - 9,000 = $33,000

So the total opportunity cost = Net Benefit + Total Net cost of going college

Opportunity Cost = 33,000 + 23,500 = $56,500

Hope that helps.