After graduating from high school, Ron Willis plans to go to college. The college tuition is $15,000 a year. Instead of going to college, Ron could take a full-time job that pays $20,000. If Ron decides to go to college, what is his opportunity cost of attending for one year?

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Business

Lil Mama

6 December, 15:51

After graduating from high school, Ron Willis plans to go to college. The college tuition is $15,000 a year. Instead of going to college, Ron could take a full-time job that pays $20,000. If Ron decides to go to college, what is his opportunity cost of attending for one year?

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Essence · Answer 1

Answer: $35,000

Explanation:

Given that,

college tuition = $15,000 a year

Instead of going to college, Ron could take a full-time job that pays $20,000

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Here, we are assuming that $20,000 is his annual earning.

Therefore, the opportunity cost of attending college for one year is $20,000 + $15000 = $35,000.