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Arrow up or down: An increase in the wage for high school graduates..................the opportunity cost of college.

Arrow up or down: An increase in the wage for high school graduates..................the opportunity cost of college.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter3: Scarcity, Trade-offs, And Production Possibilities
Section: Chapter Questions
Problem 6P
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I need help with my homework.

The Principle of Opportunity Cost

  • Arrow up or down: An increase in the wage for high school graduates..................the opportunity cost of college.

I'll attach a picture with explanation about high school graduates.

my textbook macroeconomics by o'sullivan 10th edition

978 013 519 6434

thank you!

 

The Cost of College What is the opportunity cost of a college degree? Consider a student who spends a total of $40,000 for tuition and books. Instead of going to college, the student could have spent this money on a wide variety of goods, including housing, electronic devices, and world travel. Part of the opportunity cost of college is the $40,000 worth of other goods the student sacrifices to pay for tuition and books. Also, instead of going to college, the student could have worked as a bank clerk for $20,000 per year and earned $80,000 over four years. That makes the total opportunity cost of this student's college degree $120,000: Opportunity cost of money spent on tuition $ 40,000 and books Opportunity cost of college time (four years 80,000 working for $20,000 per year) Economic cost or total opportunity cost $120,000 We haven't included the costs of food or housing in our computations of opportunity cost. That's because a student must eat and live somewhere even if he or she doesn't go to college. But if housing and food are more expensive in college, then we would include the extra costs of housing and food in our calculations. There are other things to consider in a person's decision to attend college. As we'll see later, a college degree can in- crease a person's earning power, so there are benefits from a college degree. In addition, college offers the thrill of learning and the pleasure of meeting new people. To make an informed decision about whether to attend college, we must compare the benefits to the opportunity costs. | MyLab Economics Concept Check
Transcribed Image Text:The Cost of College What is the opportunity cost of a college degree? Consider a student who spends a total of $40,000 for tuition and books. Instead of going to college, the student could have spent this money on a wide variety of goods, including housing, electronic devices, and world travel. Part of the opportunity cost of college is the $40,000 worth of other goods the student sacrifices to pay for tuition and books. Also, instead of going to college, the student could have worked as a bank clerk for $20,000 per year and earned $80,000 over four years. That makes the total opportunity cost of this student's college degree $120,000: Opportunity cost of money spent on tuition $ 40,000 and books Opportunity cost of college time (four years 80,000 working for $20,000 per year) Economic cost or total opportunity cost $120,000 We haven't included the costs of food or housing in our computations of opportunity cost. That's because a student must eat and live somewhere even if he or she doesn't go to college. But if housing and food are more expensive in college, then we would include the extra costs of housing and food in our calculations. There are other things to consider in a person's decision to attend college. As we'll see later, a college degree can in- crease a person's earning power, so there are benefits from a college degree. In addition, college offers the thrill of learning and the pleasure of meeting new people. To make an informed decision about whether to attend college, we must compare the benefits to the opportunity costs. | MyLab Economics Concept Check
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