Timothy quits his job which pays $86000 a year , to enroll in a 3 year...

Timothy quits his job which pays $86000 a year , to enroll in a 3 year graduate program. His annual school expenses are $64900 for tuition, $8500 for books, and $1300 for food.

1. What is his opportunity cost for attending the graduate program?

A motor vehicle assembly plant requires the use of both capital and labour. The Tesla manufacturing plant is considering increasing the numbers of workers to production.

1. Does Diminishing Return hold in this scenario? (YES/NO)

2. Explain answer

Solutions

Expert Solution

1. Timothy chose to go to for graduate program instead of working, his opportunity cost is actually the sum of the school expenses plus the money he could have earned had he chosen to work. His opportunity cost for attending the graduate program is (86000*3) +[(64900+8500+1300)*3] = $2,58,000+ $2,24,100 = $4,82,100.

Rahul Sunny answered 2 years ago

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