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25 June, 08:05

Suppose you have a choice of working full-time during the summer or attending summer school full-time. Summer tuition and books are $3,000. If you worked, you could make $5,000. Your rent is $1,000 for summer, regardless of your choice. The opportunity cost of going to summer school is

A) $9,000.

B) $8,000.

C) $5,000.

D) $3,000.

E) None Of The Above

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Answers (1)
  1. 25 June, 10:49
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    C) $5,000.

    Explanation:

    The summer tuiton cost, are not relevant, as that is the option we choose. We need to compare going to summer school with the work we could take during summer

    The opportunity cost is the cost of the best alternative rejected:

    salary for the summer job 5,000

    The rent expense cost is the same on both option, so there is no difference. It will not be included in the analysis.
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