Opportunity cost is an important economic concept that finds application in a wide range of business decisions. Opportunity costs are often overlooked in decision making. For example, to define the costs of a college education, a student would probably include such costs as tuition, housing, and ...
ExampleII Theopportunitycostofcollegeattendanceincludes: thecostoftuition,books,andsupplies,foregoneincome(thisisusuallythelargestcostassociatedwithcollegeattendance),andpsychiccosts. Whataboutroomandboard?ExampleIII: Opportunitycostofattendingamovie: opportunitycostoftickets...
Example #4: A college student has to decide between studying for their chemistry final or enjoying a night out with his friends. The opportunity cost of studying for the final is foregoing a night with his friends, while the opportunity cost of going out with his friends is the benefits of...
Problem:Noel has just graduated from medical college and he has been offered a job at one of the most prestigious hospitals in town. The job would pay him USD 45,000 a year. However, his uncle, who runs a health care and fitness center, has also offered him a position for USD 35,00...
Example of Opportunity Cost An executive’s stock options have just become vested. He must now choose one of two mutually exclusive actions. He can sell the options outright for $50,000 (the explicit cost) or convert them to 5,000 shares of his company’s stock at $10 per share. ...
The ratio of opportunity in this example states that for every dollar earned working for one hour as a waiter, the college student sacrifices $2 working as a salesperson. Opportunity Cost vs. Trade Off Opportunity cost is all about the most basic of economic concepts: trade-offs. It's a ...
Opportunity Cost The Next Best Alternative The Opportunity Cost of doing something is the value of the next best alternative you give up. What is the opportunity cost of investing $500 in a new stereo system? What is the opportunity cost of going to college? Opportunity cost varies from perso...
Example: Suppose that you own a building that is worth $100,000 today and is expected to be worth $100,000 one year from today. If the interest rate is 10%, what is the opportunity cost of using this building for one year? Example II The opportunity cost of college attendance includes...
2.RecentcollegegraduatewhochoosesahighpayingjobinChicagowhenhisfamilyallliveinIowaandheplanstovisitthemonceortwiceamonth ExamplesofOpportunityCost3.Businessmanwhohiresamaidtocleanhishousesohehastimetodomoreconsultingintheevening 4.Womanwhoisconsideringwhethertostayhomeandtakecareofherchildrenorworkatajobpaying$9....
A. the total spent on food, clothing, books transportation, tuition, lodging and other expenses. B. the value of the best opportunity a student gives up to attend college. C. zero for students who are fortunate enough to have all of their college expenses paid by someone else. D. zero,...