Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 5

Use the information in Table 1 (as well as the assumption about foregone income made in the chapter)to calculate the average opportunity cost of a year in college for a student at a four-year private institution under each of the following special assumptions:
a. The student receives free room and board at home at no opportunity cost to the parents.
b. The student receives an academic scholarship covering all tuition and fees (in the form of a grant,not a loan or a work-study aid).
c. The student works half-time while at school (assume for this problem that the leisure or study time sacrificed has no opportunity cost).
Table 1: Average Out-of-Pocket Cost of a Year of College,2010-2011
Source: Trends in College Pricing ,2010,The College Board,New York,NY. Notes: Averages are enrollment-weighted by institution to reflect the average experience among students across the United States. Average tuition and fees at public institutions are for in-state residents only. Room and board charges are for students living on campus at four-year institutions and off-campus (but not with parents)at two-year institutions. Four-year private includes nonprofit only.