Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her.
FIGURE 1- 3
-Chantal has a full- time job as a geological engineer and earns an annual after- tax salary of $85 000.She decides to leave her job for 6 months to scuba dive on the Great Barrier Reef in Australia,and incurs costs of $7500 for course equipment and certification,$2500 for airfare,and $12 000 for regular living expenses in Australia (equal to her living expenses at home).What is Chantal's opportunity cost for this 6- month,unpaid leave of absence?
A)$42 000
B)$65 000
C)$22 000
D)$12 000
E)$52 500

Question

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her.
  FIGURE 1- 3
-Chantal has a full- time job as a geological engineer and earns an annual after- tax salary of $85 000.She decides to leave her job for 6 months to scuba dive on the Great Barrier Reef in Australia,and incurs costs of $7500 for course equipment and certification,$2500 for airfare,and $12 000 for regular living expenses in Australia (equal to her living expenses at home).What is Chantal's opportunity cost for this 6- month,unpaid leave of absence?
A)$42 000 
B)$65 000 
C)$22 000 
D)$12 000 
E)$52 500

Quizplus · Accepted Answer

Chantal's opportunity cost includes her lost salary for 6 months ($85,000/2 = $42,500) plus the additional costs incurred ($7,500 for equipment and certification + $2,500 for airfare), totaling $52,500.

Madeleine Allows Herself $100 Per Month for Purchasing Coffee