Suppose your expenses for this term are as follows: tuition: $9,000,room and board: $1,500,books and other educational supplies: $1,000.Further,during the term,you can only work part-time and earn $3,000 instead of your full-time salary of $8,000.What is the opportunity cost of going to college this term,assuming that your room and board expenses would be the same even if you did not go to college?
A)$10,000
B)$13,000
C)$15,000
D)$18,000

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative forgone. Here, if the person didn't go to college, they could have earned $8,000 instead of $3,000. Therefore, the opportunity cost of going to college is $5,000. In addition, the expenses of tuition, room and board, and books and supplies add up to $11,500. Therefore, the total opportunity cost for the term is $11,500 + $5,000 = $16,500. However, the question specifies that room and board expenses would be the same even if the person didn't go to college. Therefore, we can subtract the room and board expense of $1,500 from the opportunity cost to arrive at the final answer: $15,000 (option C).

Suppose Your Expenses for This Term Are as Follows: Tuition