Question

In: Economics

A student who expects to graduate from Wichita State University in May of 2019 is considering...

A student who expects to graduate from Wichita State University in May of 2019 is considering whether to go on to graduate school. Which three (3) of the following are opportunity costs that the student must consider in deciding whether to go to graduate school?

The $250 the student spend last year on books while working on her undergraduate degree?

The $35,000 per year that she would make if she accepts a job that will be available to her after graduating with her undergraduate degree.

The $350 she plans to spend to fix the brakes on the car she is currently using to get to the Wichita State campus.

The $6,000 per year in tuition for her graduate degree.

The value of the time she would like to spend with her family on weekends instead of studying while working on her graduate degree.

The $900 she plans to spend on a trip to New York City with friends to celebrate after she graduates in May of 2019.

The $150 per month she spends on dog care for the dog she plans to keep regardless of whether she goes to graduate school or works next year.

Solutions

Expert Solution

A student who expects to graduate from Wichita State University in May of 2019 is considering whether to go on to graduate school. She should consider the different opportunity costs in deciding whether to go to graduate school or not.

Opportunity cost is the value of the things which one has to give up when one makes a choice. If the student decides to go to graduate school, her opportunity cost should comprise of all the things that she has to forgo in order to study at the graduate school.

I have chosen three opportunity costs that the student must consider in deciding whether to go to graduate school from the list that was provided in the question.

  • The $35,000 per year that she would make if she accepts a job that will be available to her after graduating with her undergraduate degree - She would lose the $35,000 per year if she decides to go to graduate school rather than accepting the job.

  • The value of the time she would like to spend with her family on weekends instead of studying while working on her graduate degree – This is implicit costs of her pursuing graduation because she would have to spend the time studying rather than staying with her family on weekends.

  • The $6,000 per year in tuition for her graduate degree – Once she makes the choice of going to graduate school, she forgoes the opportunities that she could have done with the $6,000 per year.

Rahul Sunny answered 4 months ago
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