Question

Please don't repost a previous answer....Thank you!

What would you be doing with your time and energy if you were not taking this class? Explain the other activity in some detail. How do you value the cost of not doing the other activity? Be explicit in defining the costs associated with each activity. Put a value on each element.

For example, I am trying to decide if I should go to a football game with the guys. I have an idea of the cost of the tickets, transportation, and the food and beverage. I clearly have the benefit of the enjoyment of the game. However, this is not all that needs to be considered. If I did not go to the game, what would I be doing? Well, I could take my wife out for dinner. How much value do I give to going out on a date with my wife? Or, I could spend time earning income. NOTE: Be careful, you cannot do everything. You must select the next best thing you would do with your time, energy, money. Once you have evaluated both uses of your time, are you still going to go to the game or are you going to take your wife to dinner? Now think of your own story about a tradeoff you have had to make, or will need to make in the future.

Answer 1

There are always a number of things an individual can do in his time. The catch is in what he chooses to do, because with every choice that is made, certain opportunity cost is always involved.

So right now, instead of taking the class in the university, a student could instead be learning guitar in a studio or working at McDonalds and making $8 per hour there.

The cost of not doing the other activity, say working in McDonalds for the 2-hour in which the class was taken is called the opportunity cost of attending the class. It is the amount of benefits given up by the student to take up the class.

In the case discussed here, the opportunity cost of attending the 2-hour class would be the wages lost had the student worked at McDonalds. That is, the loss of 2 x $8 = $16 is the opportunity cost of taking the class.