Nicky makes $25,000 a year as a sales clerk.He then decides to quit his job to enter an MBA program full-time (assume Nicky doesn't work in the summer or hold any part-time jobs).His tuition,books,living expenses,and fees total $15,000 a year.Given this information,the annual total cost of Nicky's MBA studies is:

Question

Quizplus · Accepted Answer

The annual cost of Nicky's MBA studies includes both the expenses of his living and the opportunity cost of his salary. The opportunity cost is the income he could have earned if he had not quitted his job. Therefore, the total annual cost of his MBA program is $15,000 (tuition, books, living expenses, and fees) plus $25,000 (his income). Thus, the total annual cost equals $40,000 (Option C).

Nicky Makes $25,000 a Year as a Sales Clerk