OPPORTUNITY COST Essay Example

  1. No, even if there are several things that could have been done during the time of attending college, the opportunity cost is not sum of all those activities. It refers to the benefits that are being sacrificed due to the allocation of resources to some other activity[ CITATION Hen08 l 16393 ]. If the person was not enrolled in college, the resources (time and money) thus freed could have been used only once and not over and over again as implied by the summation of the activities.

  2. There are many possible alternatives for the opportunity cost of spending an evening revising for economics exam. For example, that time could be spent preparing for another subject, which might require more efforts. Therefore, opportunity cost would be better grades in that other subject. Or, the evening could also be spent working part time on a job, which would imply that the opportunity cost could be the money thus earned. In order to make a sensible decision it is important to know the priority, importance and the future returns on the activities.

  3. Cost of food and clothing are not included because, irrespective of the taking up a job or studying in university, the requirement for food or clothes won’t change. However, if there are any differential need for clothing at the job and the university, the difference need to be accounted for in the opportunity cost calculation.

  4. Biggest benefit of higher education is the great job prospect that it holds for the future. Higher education is also correlated with higher economic return as well, as better job prospects will imply high salary. Learning new skills, is yet another benefit.

  5. Opportunity cost is a subjective phenomenon[ CITATION Kur13 l 16393 ] and therefore, it has different values for different individuals and society. For example, for an individual the cost of having higher education for an individual could be the money received from a full time job, but for the society it could be a shortage of low skilled and low paid employees. Similarly, the benefits are also subjective and therefore different.

References

Henderson, D. R. (2008). Opportunity Cost. Retrieved from http://www.econlib.org/library/Enc/OpportunityCost.html

Kurzban, R., Duckworth, A., Kable, J. W., & Myers, J. (2013). An opportunity cost model of subjective effort and task performance. Behav Brain Sci.