Jim has compiled the following list of expenses after completing one year of col
ID: 1132609 • Letter: J
Question
Jim has compiled the following list of expenses after completing one year of college. Assume that Jim would be living with his parents and working if he weren't attending college. Use this information to calculate Jim's economic cost of attending college for one year.
Tuition
$ 10,000
Dormitory room
6,000
Books and supplies
1,000
Food plan
4,000
Forgone income
22,000
Entertainment expenses
3,000
Clothing
1,000
Health insurance
2,000
Tuition
$ 10,000
Dormitory room
6,000
Books and supplies
1,000
Food plan
4,000
Forgone income
22,000
Entertainment expenses
3,000
Clothing
1,000
Health insurance
2,000
Explanation / Answer
Solution:
Economic cost
= 10,000 + 6,000 +1,000 + 4,000 + 22,000 = $43,000.
Economic Cost. Economic cost includes both the actual direct costs (accounting costs) plus the opportunity cost. For example, if you take time off work to a training scheme. You may lose a weeks pay of £250, plus also have to pay the direct cost of £100. Thus the total economic cost = £350.
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