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Sagot :
Opportunity Cost of attending college, in terms of room and board is $4000 . Explicit Cost, Implicit Cost of attending college is $14000, $20000. Total Opportunity Cost of attending college is $34000
1. Opportunity Cost is the cost of next best alternate foregone, as in value of sacrifice made, while choosing an alternative.
- Money foregone to attend college, in room & board = room & board cost with college - room & board cost without college = 5000 - 1000 = 4000
2. Explicit Cost is the actual out of pocket cash expenses outflow, done for choosing an option. Eg : Cash expenditures
- In this case, cash expenses for attending college = 14000
3. Implicit Cost is the implied estimated cost of self supplied factors of production, like value of self labour & self owned land etc.
- In this case : Value of self labour, sacrificed for attending college, ie the salary which could have earned by doing job meanwhile = 20000
4. Total opportunity cost of attending college = Explicit Cost + Implicit Cost = 14000 + 20000 = 34000
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