Carolyn Bates is a junior in college studying economics. She has created a new software application that applies the four principles of economic decision making to any potential decision that a user faces. She is considering leaving school after this academic year to pursue further development of her app. Carolyn should ignore all of the following costs when calculating the opportunity costs of leaving college EXCEPT the
A)time she will spend working on the app instead of studying.
B)90 credit hours she has already completed for her degree.
C)tuition costs she has already paid to her college.
D)skills she may gain from her final year of economics courses.

Question

Quizplus · Accepted Answer

Opportunity cost involves considering the value of the next best alternative that is forgone. In this case, the skills Carolyn may gain from her final year of economics courses represent a potential benefit she would forego by leaving college, making it relevant to the calculation of opportunity cost. The other options (A, B, C) represent sunk costs or alternative uses of time that do not directly relate to the benefits of the next best alternative.

Carolyn Bates Is a Junior in College Studying Economics