Question

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter?

A. There is still an opportunity cost, even if it is justified by higher future earnings.
B. The opportunity cost is much less than it would appear, assuming that earnings increase.
C. There is no opportunity cost, assuming that future earnings actually increase as expected.
D. The college students are completely correct in all respects.
E. Opportunity cost is a meaningless concept in this situation.

Answer 1

The correct answer is option A.

Step-by-step explanation:

We are aware that we have scarce resources with alternative uses and we need to use these resources to satisfy our unlimited needs and wants. The opportunity cost can be defined as the cost of sacrificing the alternative.

In the given example the decision is regarding going to college, its alternative can be taking up a job. In that case, the opportunity cost will be the wages that could have been earned. Though going to college provides higher earning in the future so this opportunity cost id justified.

Every economic decision involves some opportunity cost.