Answer to Question #70326 in Microeconomics for Ariba

Question

cost of attending a private college for one year is $6,000 for tuition, $2,000 for room, $1,500 for meal, and $500 for books and supplies. The student could also have earned $15,000 by getting a job instead of attending college and 10 percent interest on expenses he or she incurs at the beginning of the year. Calculate the explicit, implicit, and the total economic costs of attending college.

Answer 1

Explicit costs are: $6,000+$2,000+$1,500+$500=$10,000

Implicit costs are: $15,000+0.1*($6,000+$2,000+$500+$1500) = $16000

Total economic costs: $10,000+$15,850=$25,850