Q1. Estimate the opportunity cost for the average high school graduate to get a 4-year university degree. (List and include the ‘estimated’ dollar value of everything that is forgone for the typical 18-year old high school grad for the next FOUR years)

Background

Topic: Opportunity Cost

This question tests your understanding of opportunity cost, a fundamental concept in microeconomics. Opportunity cost is the value of the next best alternative that is forgone when a choice is made. Here, you are asked to identify and estimate what a typical high school graduate gives up to attend university for four years.

Key Terms and Concepts:

• Opportunity Cost: The value of the best alternative forgone when a choice is made.

• Explicit Costs: Direct, out-of-pocket expenses (e.g., tuition, books, fees).

• Implicit Costs: The value of resources that could have been used elsewhere (e.g., foregone wages from working instead of studying).

Step-by-Step Guidance

1. List all explicit costs associated with attending university for four years. This typically includes tuition, textbooks, student fees, and possibly room and board if living away from home.

2. Estimate the total amount of money the average high school graduate could have earned by working full-time for four years instead of attending university. This is the main implicit cost (foregone wages).

3. Add any other forgone benefits, such as work experience, promotions, or retirement contributions that could have been earned during those four years.

4. Sum all explicit and implicit costs to estimate the total opportunity cost for the average student.

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Q2. How would the opportunity cost change for the average 30-year old potential student? Higher or lower and why?

Background

Topic: Opportunity Cost Variation

This question asks you to apply the concept of opportunity cost to a different demographic—an older potential student. You need to consider how life circumstances and alternatives change with age.

Key Terms and Concepts:

• Opportunity Cost: The value of the next best alternative forgone.

• Marginal Analysis: Comparing additional benefits and costs of a decision.

Step-by-Step Guidance

1. Consider what a 30-year-old might be giving up to attend university (e.g., a higher-paying job, career advancement, family responsibilities).

2. Compare these forgone alternatives to those of an 18-year-old (e.g., entry-level job, less work experience).

3. Think about whether the explicit and implicit costs are likely to be higher or lower for a 30-year-old, and explain why (e.g., higher wages forgone, more responsibilities).

4. Summarize your reasoning without calculating a specific value.

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Q3. Is your personal opportunity cost of going to university higher or lower than for the average student? Explain.

Background

Topic: Individual Differences in Opportunity Cost

This question asks you to apply the concept of opportunity cost to your own situation, considering your unique alternatives and circumstances.

Key Terms and Concepts:

• Personal Opportunity Cost: The value of what you specifically give up to attend university, which may differ from the average.

Step-by-Step Guidance

1. Identify what you personally are giving up to attend university (e.g., a specific job, family time, travel, etc.).

2. Compare your forgone alternatives to those of the average student (e.g., do you have a higher-paying job offer, or fewer financial responsibilities?).

3. Explain whether your opportunity cost is higher or lower, and provide reasons based on your personal circumstances.

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Q4. Using opportunity cost, explain why Connor McDavid is not sitting in your class today?

Background

Topic: Opportunity Cost in Real-World Decisions

This question asks you to apply the concept of opportunity cost to a real-world example involving a professional athlete, Connor McDavid. Consider what he would have to give up to attend university instead of pursuing his hockey career.

Key Terms and Concepts:

• Opportunity Cost: The value of the next best alternative forgone.

• Professional Earnings: High salaries and endorsements that a professional athlete might earn.

Step-by-Step Guidance

1. Identify what Connor McDavid would have to give up to attend university (e.g., professional hockey salary, endorsements, career progression).

2. Compare the value of these forgone opportunities to the benefits of attending university.

3. Explain why the opportunity cost of attending university is likely much higher for him than for the average student.

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