Suppose your expenses for this term are as follows: tuition: $12 000, room and board: $6 000, books and other educational supplies: $1 000. Further, during the term, you can only work part-time and earn $8 000 instead of your full-time salary of $20 000. What is the opportunity cost of going to university this term, assuming that your room and board expenses would be the same even if you did not go to university?
A)$11 000
B)$17 000
C)$23 000
D)$25 000

Question

Quizplus · Accepted Answer

The opportunity cost of going to university is the value of the next best alternative, which in this case is the income that would have been earned if the student had worked full-time instead of part-time. The income lost due to working part-time instead of full-time is $20 000 - $8 000 = $12 000. Therefore, the total opportunity cost of going to university for this term is $12 000 (income lost) + $1 000 (educational supplies) = $13 000. Since the room and board expenses would be the same whether or not the student goes to university, they are not considered in the calculation of opportunity cost. Thus, the correct answer is D) $25 000.

Suppose Your Expenses for This Term Are as Follows: Tuition