Andrew quits his job as an accountant where he earns $55,000 per year to go back to school for two years to get an mba degree. he attends a school that charges $25,000 per year for tuition and related expenses. how much is the total cost (explicit cost plus opportunity cost) of that degree? a. $143,436

b. $75,000

c. $160,000

d. $153,436

Given,

Andrew's earning was $55,000 per year.

Fees (tuition and other related expense) for MBA school that Andrew joined $25,000 per year.

To find: total cost of the degree (explicit cost+opportunity cost)

Solution:

Explicit cost = fees for the course including all the expenses = $25,000 per year for 2 years = $25,000*2 = $50,000.

Opportunity cost = the loss of benefits from one alternative when other alternative is chosen. In this case, it is salary from the job which Andrew quits to join MBA school = $55,000 per year for 2 years = 55000*2 = $1,10,000.

So, total cost of the degree = $50,000 + $1,10,000 = $1,60,000

Answer: Option C $1,60,000