Jane Is Deciding Whether to Go to School for 8

question 278

Essay

Jane is deciding whether to go to school for 8 weeks this summer. The cost of tuition and textbooks is $1,700 and housing and other expenses will cost her $600. If she does not go to school, she will live in her parents' house for free and they will cover her food and other expenses for her. Also, if Jane does not go to summer school she could work fulltime. But the best job she can get pays only $600 per week, and Jane would only agree to give up free time for no less than $750 per week. However, if she goes to summer school, she'll have to spend 40 hours a attending classes and studying.
a) What will the summer school cost Jane in terms of money spent?
b) What are the opportunity costs of going to summer school that Jane does not pay explicitly? Explain.
c) What is Jane's total opportunity cost of going to school this summer? Explain your answer.
d) Suppose that if Jane does not go to summer school, she will eventually take the classes anyway. What is Jane marginal benefit of going to summer school?
e) Suppose Jane decides to go to school in the summer. Explain her decision using the concepts of marginal cos marginal benefit.

---

Definitions:

Rate Of Return

The profit or deficit from an investment during a specific timeframe, represented as a proportion of the investment's starting price.

Stocks

Shares of ownership in a company, representing a claim on the company's assets and earnings.

Equity Mutual Fund

A type of investment fund that pools money from multiple investors to buy a diversified portfolio of stocks or equities.

Company's Stock

Represents ownership shares in a corporation, giving stockholders a claim on the company's assets and earnings.