Question

You have learned about opportunity cost, which is the value of the next best choice sacrificed. So, when you buy a coffee at the store, what is your opportunity cost?

Scenario A: If you buy it right away and there is no line, would you say the opportunity cost of coffee is just the price you paid, e.g., $2.00?

Scenario B: If there is long line and you must wait one hour to get the coffee, what is the opportunity cost of coffee? Is it still $2.00 now that you arrive one hour late at work and miss the opportunity to make $20.00 during that one hour?

PART 2: Can you explain what is the opportunity cost of getting a college degree? Please list all the items that make up the opportunity cost .What are the benefits of getting a degree and is it worth it?

Answer 1

When I buy coffee at the store, the opportunity cost is the value of the next best choice sacrificed which could be tea which was for $1. In scenario A $2 is the opportunity cost as not having coffee is sacrificed. Thus the person spends $2 for coffee which is the opportunity cost if he has coffee. If he wouldn't have had coffee he would have spent no money, which is why $2 is the opportunity cost of having coffee.  

Scenario B: Opportunity cost is $22 as the person sacrificed one hour of work for the coffee by waiting in line for one hour. He could have made $20 if he would have worked for one hour, thus he sacrificed $20 worth of work which is the opportunity cost plus $2 by spending on coffee.

Part 2: Opportunity cost of getting a college degree is working during that time and earning. Thus whatever money earned during that time could be the opportunity cost and spending money on fees, of having children and raising them, of being married could be the opportunity costs.

Benefits of getting a degree are that the wages could be higher than without a college degree. The post is higher and there are less chances of being laid off because of the skills, which makes up for the income lost during the years acquiring knowledge as the payouts are higher.