Question

Suppose that your tuition to attend college is $24,000 per year and you spend $8,000 per year on room and board. If you were working full time, you could earn $30,000 per year. What is your opportunity cost of attending college for one year? $32,000 $38,000 $54,000 $62,000

Answer 1

$30,000

Step-by-step explanation:

Opportunity cost or implicit is the cost of the option forgone when one alternative is chosen over other alternatives.

In order to attend college, i would have to give up working. My opportunity cost is what i would have earned if i was working. This is $30,000.

Explicit cost is the cost actually incurred in carrying out an activity. Here, it is the total amount expended in attending college = $24,000 + $8,000 = $32,000