You are a student at a university. You pay $8,000 per year in tuition, $5,000 per year in living expenses, and $1,000 per year for books. Were you not in school, you could earn $15,000 per year and you would not live with your parents. What is your economic cost of a year in college?
A) $9,000
B) $15,000
C) $24,000
D) $29,000

Question

Quizplus · Accepted Answer

The economic cost of attending college includes both explicit costs (tuition, living expenses, and books) and implicit costs (foregone earnings if not attending college).

Total economic cost = explicit cost + implicit cost

Explicit cost = $8,000 + $5,000 + $1,000 = $14,000

Implicit cost = $15,000 (foregone earnings) + $5,000 (foregone living with parents) = $20,000

Total economic cost = $14,000 + $20,000 = $24,000.

Therefore, the best choice is C.

You Are a Student at a University