Chantal has a full-time job as a geological engineer and earns an annual after-tax salary of $85 000.She decides to leave her job for 6 months to scuba dive on the Great Barrier Reef in Australia,and incurs costs of $7500 for course equipment and certification,$2500 for airfare,and $12 000 for regular living expenses in Australia (equal to her living expenses at home).What is Chantal's opportunity cost for this 6-month,unpaid leave of absence?
A)$12 000
B)$22 000
C)$42 000
D)$52 500
E)$65 000

Question

Quizplus · Accepted Answer

Chantal's opportunity cost includes the income she would have earned if she had not taken the unpaid leave. In this case, her annual after-tax salary is $85,000, so her 6-month salary would be $42,500. In addition, she incurred expenses of $7,500 for scuba diving certification, $2,500 for airfare, and $12,000 for living expenses in Australia, which brings her total opportunity cost to $52,500 (the sum of her lost income and expenses incurred). Therefore, the answer is D.

Chantal Has a Full-Time Job as a Geological Engineer and Earns