Question

Michelle Wie, a teenage golf prodigy who earned $16 million in endorsements and $4 million in price money and appearance fees in 2006, announced that she would enroll as a student at Stanford University in the fall of 2007. What was her opportunity cost of a year of college? How does it compare to your opportunity cost of a year of College?

Answer 1

The opportunity cost refers to the foregone benefits when one alternative is chosen over the other available opportunities. In the given case the opportunity cost of Michelle Wie will be next best alternative to her, which means $16 million in endorsements plus $4 million in prize money. Therefore $20 or more million dollars in revenue is the opportunity cost of Michelle Wie.

If I get myself enrolled as a student at Stanford University and compared my opportunity cost with Michelle Wie it will be very less. Her opportunity cost is nearly 500 times the price of the country’s average price for the tuition fees, boarding and lodging. My opportunity cost will be an average paying part-time job that pays nearly $2000 per month and the leisure time which I like to spend on my hobby activities such as singing and dancing