If Jane attends graduate school,it will take her two years,during which time she will earn no income.She will pay a total of $100,000 for tuition,$20,000 for room and board,and $2,000 for books.If she spends the two years working rather than attending college,she will pay a total of $18,000 for room and board,pay no intuition,and buy no books.Based on this information,Jane's economic cost of attending graduate school would be $175,000 if,over the two years,she could earn a total of

Question

Quizplus · Accepted Answer

The economic cost includes both the explicit costs and the opportunity cost. The explicit costs are $100,000 (tuition) + $20,000 (room and board) + $2,000 (books) = $122,000. The opportunity cost is the income she foregoes by not working, which is $71,000. Therefore, the total economic cost is $122,000 + $71,000 = $193,000. However, since she would pay $18,000 for room and board even if she worked, we subtract this from the total, resulting in $175,000.

If Jane Attends Graduate School,it Will Take Her Two Years,during