Noel has just graduated from medical college and he has been offered a job at on

Question

Noel has just graduated from medical college and he has been offered a job at one of the most prestigious hospitals in town. The job would pay him $45, 000 a year. However, his uncle, who runs a health care and fitness center, has also offered him a position for $35, 000 a year. However, Noel wishes to enroll for a medical research program at a foreign university, which would cost him $38, 000, and eventually does so. Calculate his opportunity cost.

Explanation / Answer

Number of Economic Alternatives = 3 ($45, 000 job, $35, 000 job and -$38, 000),,, Desired Alternative = - 38, 000,,, Next Best Alternative = 45, 000,,, ,Opportunity Cost = Cost of Selected Alternative - Cost of Next Best Alternative =>Opportunity Cost = - 38, 000 - 45, 000 = -83, 000

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