One example of opportunity cost of attending college is “the highest valued alternative one forfeits to attend college”. So basically, the opportunity cost would essentially be anything you would have done, and the money earned and saved had you not attended college.
What is your opportunity cost of attending college?
In short, the opportunity cost of attending college is the cost of tuition, any associated costs, and any income, experience, and pleasure you miss out on because you choose to attend college.
What are opportunity costs give an example of an opportunity cost?
When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.
What is opportunity cost short answer?
What Is Opportunity Cost? Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. … Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.
What will be the opportunity cost?
“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up,” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities.
What is the opportunity cost of dropping out of school?
Half of Americans on public assistance are dropouts. A study out of Northeastern University found that each high school dropout costs taxpayers $292,000 through the course of their lives. Feel free to do the math here, but according to my calculations that equals nearly $957 BILLION a year.
What is the opportunity cost of earning an advanced college degree is that?
The college fee per year is $30k plus expenses. After 4 years, you will be out $120k. The opportunity cost in this case will be $240k since you chose to go to college instead of working. Thus, you will earn less or no money during the years that you are in college.
What is an example of opportunity cost in your life?
A player attends baseball training to be a better player instead of taking a vacation. The opportunity cost was the vacation. Jill decides to take the bus to work instead of driving. It takes her 60 minutes to get there on the bus and driving would have been 40, so her opportunity cost is 20 minutes.
What is opportunity cost diagram?
Definition of Opportunity Cost in Economics. … The opportunity costs of a product are only the best alternative forgone and not any other alternative. These costs are viewed as the next-best alternative goods that we can produce with the same value of factors which are more or less the same.
What is the importance of opportunity cost?
As a representation of the relationship between scarcity and choice, the objective of opportunity cost is to ensure efficient use of scarce resources. It incorporates all associated costs of a decision, both explicit and implicit.
Can opportunity cost zero?
No, there can never be zero opportunity cost for anything that we human beings do in this life. In order to see why this is so, let us first look at the definition of opportunity cost. Our opportunity cost when we choose a given action is the value of the next best thing that we could have done.
What is opportunity cost and sunk cost?
Sunk costs are named so because they can’t be recovered. … Opportunity costs on the other hand are costs which do not necessarily involve any cash outflows but which need to be considered because they reflect the foregone profit that could have been elsewhere.
Is opportunity cost included in cash flow?
A definition often used for relevant cash flows states that they must be cash flows that occur in the future and are incremental. … While not specifically included in the definition of a relevant cash flow (as noted above) opportunity costs are also relevant cash flows.
Is opportunity cost always monetary?
Any decision that involves a choice between two or more options has an opportunity cost. Opportunity cost contrasts to accounting cost in that accounting costs do not consider forgone opportunities. … Opportunity cost is useful when evaluating the cost and benefit of choices. It often is expressed in non-monetary terms.
Why is opportunity cost not the same for all individuals?
Individuals face opportunity costs in both economic and non-economic decisions. Every decision we make essentially means giving up other options, which all have a value.
What is the opportunity cost of investing in human capital?
The opportunity cost of investing in human capital is the lost production of goods and services that could have been had with the same money.