Question

1.Which of the following are components of the opportunity cost of being a full-time student who lives at home? The things that the student would have bought with: • A higher income • Expenditure on tuition • A subscription to the Rolling Stone magazine • The income a student will earn after graduating

Answer 1

Answer:

Opportunity cost refers to loss arising out of a foregone option when another option or alternative is chosen.

Following would constitute the opportunity cost:

1. A Higher Income

This represents the scenario if the same student would've been working instead of being a student at home. This means the articles the student could've purchased in such a scenario with a higher income.

2 Expenditure On tuition

This is a specific cost related to being a student and would not have arose had the student been working or doing something else.

3. A Subscription to the Rolling Stones Magazine

If such a subscription directly relates to study and is essential then it represents opportunity cost otherwise not.

4. The Income student earns after graduating does not relate to the current period and hence will not constitute opportunity cost.