Question

The opportunity cost of your decision to go to college is the value of the next best alternative that you gave up. Suppose that your next best alternative to college is to work as a cashier. By not going to college, and taking this job, you could earn $19,000 per year. Then your opportunity cost of college is _____, and your total cost of a year of college is _____ per year.

Answer 1

Answer: $16,000; $48,000

Explanation:

Then your opportunity cost of college is $16,000, and your total cost of a year of college is $48,000 per year.

The opportunity cost as explained is the value of the next best alternative given up. In this case that next best alternative is a salary of $19,000 a year so that would be the opportunity cost.

The total cost of going to college however will be the actual cost of going to college plus the opportunity cost of going to college because not only are you incurring costs for going to college but you are also forgoing income you could have earned. The total cost is therefore;

= 32,000 + 16,000

= $48,000