Figure 1- 2 With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms.

-Suppose Andrea has a job that pays her $25 000 per year (after taxes).She is considering quitting her job and going to university full time for four years.Tuition fees and books will cost $12 000 per year.Living expenses in either situation will cost $10 000 per year.What is the opportunity cost of Andrea's four- year university degree?

Question

Figure 1- 2 With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms.
 
-Suppose Andrea has a job that pays her $25 000 per year (after taxes).She is considering quitting her job and going to university full time for four years.Tuition fees and books will cost $12 000 per year.Living expenses in either situation will cost $10 000 per year.What is the opportunity cost of Andrea's four- year university degree?

Quizplus · Accepted Answer

The opportunity cost includes the salary she foregoes ($25,000 per year for 4 years = $100,000) and the tuition fees and books ($12,000 per year for 4 years = $48,000), totaling $148,000. Living expenses are not included as they are the same in both scenarios.

Figure 1- 2 with a Budget of $500 000,a School