Question

(Check your book for an explanation of double counting costs) Consider Diego’s decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Diego’s cost of going to college is

Answer 1

Answer:

$42,600

Explanation:

Diego's cost to go to school is what he spends less what he stops earning if he works.

Data:

Tuition = $21,000

Room and Board = $11,000

Books = $1,800

Total expenses going to school =?

Salary if he works = $16,000

Expenses if he works = $7,200

Net Income =?

C = Diego’s cost of going to college =?

Calculations:

Expenses of going to school:

$21,000 + $11,000 + $1,800 = $33,800

Net income if you work:

$16,000 - $7,200 = $8,800

C = $33,800 + $8,800 = $42,600

Diego’s cost of going to college is $42,600

Hope this hepls!