Question

Assume that a student attends a four-year college with tuition costs of $20,000 per year, room and board costs of $5,000 per year, and books/entertainment costs of $1,000 per year. If the student did not go to college, she would work at a job that pays $25,000 per year but still face the same room and board and entertainment expenses. The opportunity cost of attending college for this student for four years is:

Answer 1

Answer:

$180,000.

Step-by-step explanation:

We have been given that a student attends a four-year college with tuition costs of $20,000 per year, room and board costs of $5,000 per year, and books/entertainment costs of $1,000 per year. If the student did not go to college, she would work at a job that pays $25,000 per year but still face the same room and board and entertainment expenses.

We know that opportunity cost is the profit lost, when one alternative is selected over another.

Opportunity cost of attending college for 4 years would be amount lost from job in 4 years plus amount spent on studies because the student lost $25,000 for four years for not doing the job and spent $20,000 for 4 years on studies.

$4(\ 25000+\ 20,000)=4(\ 45,000)=\ 180,000$

Therefore, the opportunity cost of attending college for this student for four years is $180,000.