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by 1krystian on January 15th, 2008

1krystian

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What is the formula for finding oppertunity cost

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  • by Bob on September 25th, 2008

    Bob

    no formulae exist of which i'm aware... in part, it depends on the relative value of what you've gotten, the relative value of what you're getting, changes over time to each, and, hopefully, you can find some objective method for calculating gains, costs, and opportunity costs.

    for example, the cost of college for 4 years is, say, $80,000 in actual tuition, $30,000 in room and board. so, cost is $110,000.

    you're likely to make $15,000 a year more per year than someone without college. multiply $15,000 by 40 years and that's $600,000.

    opportunity cost: instead of spending all my time trying to calculate silly economics formulae, i go to work instead of college. the opportunity cost, then, is the salary that i could've made working at mcdonalds, earning, over 4 years, $60,000.

    we'd all conclude that the cost of $110k plus the added wages of $600k are far greater than the $60k opportunity cost.

    Comments

    • Wow, Bob, what a helpful answer. I hope nobody mistakenly thinks you've got some sort of chip on your shoulder.

      keddy

      by keddy on December 12th, 2010

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