Jane Is Deciding Whether to Go to School for 8

question 357

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 her free time for no less than $750 per week. However, if she goes to summer school, she'll have to spend 40 hours a week 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's 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 cost and marginal benefit.

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Definitions:

Expectancy Effect

The phenomenon in which a person's expectations about a situation or outcome can influence their behavior and the situation's outcome itself.

Pygmalion Effect

A psychological phenomenon wherein high expectations lead to improved performance in a given area.

High Expectations

Holding aspirational standards or beliefs about future outcomes or performances that are significantly above the norm.

Perform Well

Achieving or exceeding the standards of excellence or objectives in a particular task or area of activity.