A star college football running back made it big this year! He’s a 21 year old j

Question

A star college football running back made it big this year! He’s a 21 year old junior, heavily scouted by the NFL, and could go pro right now: it he does, he expects to earn an average $1 million dollars per year in the NFL until he retires, probably around age 30. If he decides instead to stay in school one more year and graduate before declaring eligibility for the draft at age 22, what is the opportunity cost for playing for his college team his senior year before going pro?

A. A college degree

B. $1,000,000

C. $8,000,000

D. $9,000,000

Explanation / Answer

Opportunity cost is the lost income for taking a decision

In this case, if he decide to stay in school for one more year then he is losing $1 million that he would have got if he would have joined this year.

So he is losing $1 million by not starting paying this year. Therefore, his opportunity cost is $1,000,000

Answer is option 'B' i.e. $1,000,000

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