Question

Like a good economist, you calculated the opportunity cost of getting your college degree. suppose that at your university, you will pay $10000 each year for tuition, $2500 each year for textbooks, and $8000 per year for room and board. before you left for college, your boss at your high-school job offered you a job paying $25000 per year. assume that if you decided not to go to college, your parents would not let you live at home. what is your opportunity cost for four years of college?

Answer 1

The opportunity cost for four years of college is $50,000.  

Further Explanation:

Opportunity cost:

Opportunity cost refers to the cost forego due to opting for the other alternative. Opportunity cost is the type of loss that the person or corporation may experience loss. This cost does not show in the accounts.

In this situation, the job is opted rather than getting a degree from the university. The opportunity cost is the difference between the salary earned from doing the job and the cost paid for staying in the room. As the parents will not let allow to live at home. The opportunity is the degree that foregoes due to opting for the job opportunity.  

The college fees and tuition fees are considered as the opportunity cost.  

Calculating the opportunity cost:

Opportunity cost  =  (College fees + Tuition fees) × Number of years

 =  ( $10,000 +  $2,500) × 4

 =  $50,000

Therefore, the opportunity cost for four years while opting job rather than the college is $50,000 and the degree.  

Learn more:

1. Learn more about out of pocket cost

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2. Learn more about the total cost

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3. Learn more aboutvariable cost

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Answer details:

Grade: Middle School

Subject: Accounting

Chapter: Opportunity cost

Keywords:

good economist, calculated, opportunity cost, college degree, textbooks, room rent, forgoes, high school job, four years, $10,000 each year tuition, offered job paying, alternative, corporation, loss, and parents.

Answer 2

After 4 years of college, it would be better to not go to college. Since his high school job was paying $25,000 a year ($100,000 in four years), and going to college cost $20,500 ($82,000 in four years), after those four years he would still have over $18,000 to spend at his leisure, or $4,500 every year. This leftover money can be used to find a place for rent for at least $375.