Question

Suppose you have a choice of working full-time during the summer or going to summer school full-time. Summer tuition and books cost $2,200. If you worked, you could earn $7,000. Your rent for the summer is $1,000 irrespective of your choice. If these are the only relevant costs to consider, the opportunity cost of going to summer school is:

Answer 1

Answer:

$9,200

Explanation:

The computation of the opportunity cost of going to summer school is presented below:

= Summer tuition fees and cost of books + earning if working somewhere

= $2,200 + $7,000

= $9,200

In order to determine the opportunity cost, we considered the summer tuition fees & books cost and earnings

And, the summer rent is a fixed cost so it would not be included.