Question

microenconomics

Opportunity Costs- Graded The concept of Opportunity Cost is one of the most misunderstood concepts in Microeconomics. Therefore, an extra effort in the literature survey is recommended prior to articulating your answers for this week's coursework. Hint: opportunity cost is NOT an outcome of a decision. Let's discuss the cost of attending college. Some of the more common expenses that come to mind include the explicit costs of tuition, books, and room and board. But what about the implicit costs or what are known as opportunity costs? Even though these are implicit costs, they most certainly are real costs! Let's explore the idea that cost is not always an explicit payment but also a loss. Considering this what would you list as implicit or opportunity costs that you have incurred as a result of your decision to attend school? What would be some opportunity costs if you decided not to attend college? Please note: Be sure to get your first post in not later than Thursday. Add a new discussion topic

Answer 1

When a student decides to enrol in a degree program at college, he needs to sacrifice all the other opportunities that he could have without it. The expenditure on tuition is the opportunity cost of joining college. This is because the student pays tuition when he is studying in college. Opportunity cost also includes the explicit payment made in selecting an alternative. Therefore, expenditure on tuition is a part of opportunity cost of going to college. The income earned after graduating from high school is also an opportunity cost because the student will not be earning anything during college Hence, expenditure on tuition and the income lost while studying in college constitute the opportunity cost of being a full-time college student. Resources are scarce and each of them can be put to numerous uses or alternatives. When one alternative is selected, others have to be rejected. The next best alternative that is rejected over the selected one entails a cost which is considered the opportunity cost of the selected alternative. In this manner, when a decision is made, it has a definite opportunity cost due to resources being scarce. This is also the reason why scarcity affects decision making.