Question

Joe lives in Orlando and has a job making $24,860 per year. He decides to quit his job and attend UCF. The cost of his tuition and books is $3,934 per year. He lives in an apartment and pays rent of $10,903 per year. What is Joe’s opportunity cost of attending UCF for one year? Enter a whole number

Answer 1

The opportunity cost for going to college :-

Forgone salary - $24860

(+). Tuition and books of college - $3934

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Total opportunity cost . =. $ 28794

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Note :-

1) Opportunity cost will include those expenses which will be incurred if a person chooses to go to a college instead of working. Thus it will include the college expenses plus the income that a person could have earned if he would have chosen not to go to the college

2) The rental expenses are not included while calculating the opportunity cost because even if a person does not choose to go to a college ,he has to live somewhere and pay for the same. Thus going to the college or not going to college does not change his expenditure for the above . Thus payment for renting an apartment is excluded from the calculation of opportunity cost.