Question

Mary is a talented actress who can earn a $100,000 per week in Hollywood doing a television show.

Bill is a greeter at the local Walmart earning $10.00 per hour.

Which of the two, Mary or Bill, is likely to attend college? Explain your answre

The correct answer requires you to apply the correct economic concepts learned in this week's lesson. Your reply needs to be at least 100 words.

Answer 1

We need to compare the opportunity cost of the two individuals. Opportunity cost is the monetary amount lost when an economic activity is entertained. It is therefore represents the monetary loss of acquiring a particular economic activity.

In this case Mary will face and opportunity cost of 100000 dollar in addition to the explicit cost of attending the college including tuition and classroom expenses. The same opportunity cost is $10 for Bill. Assume that both of the two individuals are facing the same explicit cost of attending the college and that they will have to leave their job when they decide to attend college.

Since the opportunity cost is lower for Bill it is Bill who is most likely to attend college.