TIM: Hi, Raphael. Many concepts in economics can be confusing at first. Let's talk it through. Economists think of costs a bit differently than just the dollar amount that you pay. To an economist, the true cost of college includes the total value of what you give up in order to acquire your college education. In other words, not only did you give up the tuition money that you paid, but by attending college, you gave up opportunities to do other things with your time as well. This is where the idea of opportunity cost comes from. The opportunity cost of your decision to go to college is the value of the next best alternative that you gave up. Suppose that your next best alternative to college is to work as a cashier. By not going to college, and taking this job, you could earn $16,000 per year. Then your opportunity cost of college is $ , and your total ocost of a year of college is $48,000 per year. RAPHAEL: I think I get it now. So when I take into account the opportunity cost of college, the true cost is actually than just the tuition. TIM: Correct. Thinking about costs in this way will help you make more rational decisions in your everyday life. Now tell me, how can you explain your decision to go to college? RAPHAEL: I chose to go to college because, for me, the value of a year in college Grade It Now Save & Continue
TIM: Hi, Raphael. Many concepts in economics can be confusing at first. Let's talk it through. Economists think of costs a bit differently than just the dollar amount that you pay. To an economist, the true cost of college includes the total value of what you give up in order to acquire your college education. In other words, not only did you give up the tuition money that you paid, but by attending college, you gave up opportunities to do other things with your time as well. This is where the idea of opportunity cost comes from. The opportunity cost of your decision to go to college is the value of the next best alternative that you gave up. Suppose that your next best alternative to college is to work as a cashier. By not going to college, and taking this job, you could earn $16,000 per year. Then your opportunity cost of college is $ , and your total ocost of a year of college is $48,000 per year. RAPHAEL: I think I get it now. So when I take into account the opportunity cost of college, the true cost is actually than just the tuition. TIM: Correct. Thinking about costs in this way will help you make more rational decisions in your everyday life. Now tell me, how can you explain your decision to go to college? RAPHAEL: I chose to go to college because, for me, the value of a year in college Grade It Now Save & Continue
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Homework: What is Economics?
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explained that the true cost of going to college includes both the tuition I pay as well as something called the "opportunity cost" of going to
college. I don't understand. I pay $32,000 per year in tuition. The tuition is what I pay to the school, so it seems like that should be my true
Costi
TIM: Hi, Raphael. Many concepts in economics can be confusing at first. Let's talk it through.
Economists think of costs a bit differently than just the dollar amount that you pay. To an economist, the true cost of college includes the
total value of what you give up in order to acquire your college education. In other words, not only did you give up the tuition money that you
paid, but by attending college, you gave up opportunities to do other things with your time as well. This is where the idea of opportunity cost
comes from.
The opportunity cost of your decision to go to college is the value of the next best alternative that you gave up. Suppose that your next best
alternative to college is to work as a cashier. By not going to college, and taking this job, you could earn $16,000 per year. Then your
opportunity cost of college is $
, and your total cost of a year of college is $48,000 v per year.
RAPHAEL: I think I get it now. So when I take into account the opportunity cost of college, the true cost is actually
than just the
tuition.
TIM: Correct. Thinking about costs in this way will help you make more rational decisions in your everyday life. Now tell me, how can you explain
your decision to go to college?
RAPHAEL: I chose to go to college because, for me, the value of a year in college
Grade It Now
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