Question

Brooke and Sandy both attend the same college and have the same expenses for tuition, books, and supplies. However, Brooke is a famous actress who could earn $2 million per year if she were not attending college while Sandy could earn $10,000 a year serving hamburgers if he were not attending college. It follows that the opportunity cost of attending college:
A. is the same for both Brooke and Sandy.
B. is greater for Brooke than for Sandy.
C. is greater for Sandy than for Brooke.
D. for Brooke and Sandy cannot be compared.

Answer 1

Answer: Option (B) is correct.

Explanation:

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

The opportunity cost of attending college for Brooke is the amount that she could earn as an actress i.e. $2 million per year.

The opportunity cost of attending college for Sandy is the amount that he could earn by serving hamburgers i.e. $10,000 a year.

Therefore, opportunity cost of attending college is greater for Brooke than for Sandy.