Question

Like a good economist, you calculated the cost of getting your college degree, including the opportunity cost. Suppose that at your university, you will pay $12,000 each year for tuition, $3,000 each year for textbooks, and $10,000 per year for room and board. Before you left for college, your boss at your high-school job offered you a job paying $15,000 per year.

Assume that if you decided not to go to college, your parents would let you live at home for free.

Including the opportunity cost, what is the cost of attending four years of college? $

Answer 1

The cost of attending a 4-year college can be calculated by summing up the tuition, textbooks, and room and board expenses for each year:

Tuition cost for 4 years: $12,000/year * 4 years = $48,000
Textbook cost for 4 years: $3,000/year * 4 years = $12,000
Room and board cost for 4 years: $10,000/year * 4 years = $40,000

Total cost of attending a 4-year college: $48,000 + $12,000 + $40,000 = $100,000

Additionally, we need to consider the opportunity cost of attending college. The opportunity cost is the value of the next best alternative foregone, which in this case is the salary you would have earned if you had taken the job instead of going to college.

Opportunity cost of attending college: $15,000/year * 4 years = $60,000

Therefore, the total cost of attending a 4-year college, including the opportunity cost, is $100,000 + $60,000 = $160,000.