Final answer:
The opportunity cost of attending class for the student is the total of the forgone income and the saved campus parking fee, which adds up to $44. Opportunity costs are critical in assessing the true cost of activities and can significantly influence decision-making by highlighting potential savings or earnings lost.
Step-by-step explanation:
The opportunity cost of attending class is a concept that encompasses not only the direct expenses but also the foregone income that one could have earned during that time. In the scenario provided, the student is forgoing the opportunity to work for four hours at a job that pays $10 per hour. Additionally, the student is saving a $4 parking fee by not going to class. Therefore, the opportunity cost includes both the income not earned ($40) and the money saved on the parking fee ($4), summing up to a total of $44.
Opportunity cost is calculated by considering both the direct costs saved and the potential income that is not made due to engaging in an alternate activity, such as attending a class. In various situations, understanding opportunity costs can alter decision-making. For example, students often weigh the costs of their education against what they could earn if they were working instead. This includes the money spent for attending the institution and the potential earnings lost while being in school. These costs can impact long-term personal financial planning and career decisions.
Similarly, in everyday decisions such as choosing between eating out or bringing lunch from home, calculating the annual cost of the more expensive choice can help people realize the savings potential over time—savings that can then be utilized for other, possibly more substantial, life experiences or investments.