Question

Suppose after graduating from college you get a job working at a bank earning $30,000 per year. After two years of working at the bank earning the same salary, you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank. Which of the following should not be included in a calcula-tion of your opportunity cost? O
a) the cost of tuition and books to attend the graduate program
b) the $30,000 salary that you could have earned if you retained your job at the bank
c) the $45,000 salary that you will be able to earn after having completed your graduate program
d) the value of insurance coverage and other employee benefits you would have received if you retained your job at the bank

Answer 1

Answer: The $45,000 salary that you would be able to earn after having completed your graduate program.

Explanation:

The opportunity cost is an economic term used to describe the cost of making a choice over another.

In the case of the question if I were earning $30,000 at my job, and had to quit the job to further my studies my opportunity cost would be the salary and benefits of the job am leaving and also the expense I would undertake in the graduate program.