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Suppose Paul Would Pay $15,000 Per Year for Tuition at Intelligentsia

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Essay

Suppose Paul would pay $15,000 per year for tuition at Intelligentsia University. Books are $2,500 per year and fees are $1,000. If Paul attends the University, he will only be able to work part time so instead of earning $18,000 per year he will earn only $5,000. What is Paul's opportunity cost of attending the university for four years?


Definitions:

Net Capital Outflow

The difference between the domestic country's sale of assets to foreigners and its purchase of assets from foreigners during a specific period.

Loanable Funds

The market model representing the supply and demand for loans, where the interest rate is determined.

Demand

The desire of purchasers to buy a certain good or service, backed by the ability and willingness to pay a specific price.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the real yield to savers.

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