Suppose Your Expenses for This Term Are as Follows: Tuition

question 132

Multiple Choice

Suppose your expenses for this term are as follows: tuition: $10 000, room and board: $6000, books and other educational supplies: $1000.Further, during the term, you can only work part-time and earn $8000 instead of your full-time salary of $20 000.What is the opportunity cost of going to university this term, assuming that your room and board expenses would be the same even if you did not go to university?

• A)$11 000
• B)$17 000
• C)$23 000
• D)$29 000

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Definitions:

Substitution Effect

The substitution effect describes the change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.

Higher Wage

The increased remuneration or salary received by an employee, often as a result of promotions, market adjustments, or successful salary negotiations.

Labor for Leisure

The trade-off between working hours for income and spending time on relaxation or enjoyment activities.

Hourly Wage Rate

The hourly wage rate is the amount of money paid to an employee for one hour of work, often used to calculate overall earnings in jobs that compensate workers on an hourly basis.