Homework Ch 01 Back to Assignment Attempts Keep the Highest1

Homework (Ch 01) Back to Assignment Attempts: Keep the Highest:1 1. Understanding opportunity cost Before you started applying for college, a job recruiter offered you a full-time cashier position at a local retail store, earning an after-tax salary of $24,000 per year. However, you turn down this offer and attend your first year of college. The additional monetary cost of college to you, including tuition, supplies, and additional housing expenses, is $38,000. You decide to go to college, probably because Grade It Now Save & Continue Continue without saving

Solution

Understanding opportunity cost

Before you started applying for a college, a job recruiter offered you a full-time cashier position at a local retail store, earning an after-tax salary of $24,000 per year. However, you turn down this offer and attend your first year of college. The additional monetary cost of college to you, including tuition, supplies and additional housing expenses, is $38,000.

You decide to go to college, probably because you value a year of college at more than $62,000.

The opportunity cost of going to the college than joining as a full-time cashier is the earnings from the job of cashier ($24,000) plus the cost of joining in the first year of college ($38,000). The total opportunity cost will be $62,000 ($24,000 + $38,000).