Opportunity cost is the sacrifice one has to make so that he or she can get the best alternative possible. In life, there are choices to make. The choices have consequences.
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A student does not choose to go to college because there is nothing else to do. There are very many things that the student could have done. For instance, going to school would deny the student the opportunity to work (Beach 370). It also denies him or her the opportunity to just rest. Perhaps the student could have used the school fees to invest in a business that would make him or her successful. The student could also opt for a mentor in the career he wants to pursue in life.
However, the opportunity cost is not the sum of all the other things the student would have done. Some of the things like resting would not replace the alternative benefit. Opportunity cost also deals with the benefit that one would have derived from the alternative action (Arora and Nandkumar 250).
The opportunity cost of spending an evening revising for an economics exam is watching a movie. It can also be resting as one prepares for the exam. During the evening one could also have read a novel or written a book. One could also revise for a different paper other than economics.
For one to make a sensible decision about what to do that evening, it would be prudent to understand the time table of the exam. Maybe the economics exam would be several days away or the following day. Another critical issue would be to know the reason for passing the economics exam (Greenwood and Holt 178). The question in the student’s mind would be to know if that was one’s choice of career in life. It would also be prudent for the student to know if what he or she is foregoing is equally as important as passing the economics exam.
In making the list for the opportunity cost for higher education, food is not part of it because the student would eat whether in school or at home. The food budget cannot be an alternative to education. It could be an alternative to fasting for the spiritual benefit or health condition. Food benefits the body but education benefits someone psychologically, socially, and economically (Shoup 412).
The cost of clothing should not be part of the list of opportunity costs. Whether the student attends school or not, he or she will still need those clothing (Horngren, Datar, and Rajan 501). The student can buy clothes and still go to school. The benefit that the student would derive from education cannot be similar or opposite to that of buying or not buying clothes.
Higher education will improve and expand the student’s thoughts about the career he or she has chosen. It will also enable him or her to become employable and knowledgeable about the endeavor he or she will pursue in life. Higher education will also enable the student to afford what he or she sacrificed for education. Higher education gives one status in the society (Chodorow-Reich and Karabarbounis 330).
Opportunity cost to one attending higher education is different from the opportunity costs to society as a whole. The individual benefits would enable the student to pursue personal ambition. The society would expect community service. The community would also benefit because the student would concentrate on learning and not other harmful behaviors like becoming a drug addict. One similarity is that the individual status affects the society. As education builds an individual’s capacity, it also builds community capacity.
Arora, Ashish and Anand Nandkumar. Cash-Out or Flame-Out! Opportunity Cost and Entrepreneurial Strategy. Cambridge, Massachusetts: National Bureau of Economic Research, 2009. Print.
Beach, J. M. Gateway to Opportunity?: A History of the Community College in the United States. Sterling, Virginia: Stylus Pub., 2010. Print.
Chodorow-Reich, Gabriel and Loukas Karabarbounis. The Cyclicality of the Opportunity Cost of Employment. Cambridge, Massachusetts: National Bureau of Economic Research, 2013. Print.
Greenwood, Daphne T. and Richard P. F. Holt. Local Economic Development in the 21st Century. Armonk, New York: M.E. Sharpe, 2010. Print.
Horngren, Charles T, Srikant M Datar, and Madhav V Rajan. Cost Accounting. Upper Saddle River, New Jersey: Pearson/Prentice Hall, 2012. Print.
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Shoup, Donald C. The High Cost of Free Parking. Chicago, Illinois: Planners Press, American Planning Association, 2011. Print.