Margo spends $30,000 on one year's college tuition.The opportunity cost of spending one year in college for Margo is:
A)$30,000.
B)whatever she would have purchased with the $30,000 instead.
C)whatever she would have earned had she not been in college.
D)whatever she would have purchased with the $30,000 plus whatever she would have earned had she not been in college.

Question

Quizplus · Accepted Answer

The opportunity cost of an action is the value of the next best alternative foregone. In Margo's case, it includes both the $30,000 she could have spent on other goods or services (B) and the income she could have earned if she had worked instead of attending college (C). Therefore, the correct answer is the sum of these two values (D).

Margo Spends $30,000 on One Year's College Tuition