Bill is interested in being a basketball referee. In order to get certified and known as an official, he needs to attend a camp for basketball officials. At this camp, Bill will learn instruction about refereeing, referee at least four games, be seen by people who assign officials to games from the grade school level through high school varsity level, and meet other officials. If Bill gets hired to games, he will make a minimum of $20.00 a game, possibly more. Bill does not have the $350.00 in his monthly budget to cover the cost of the camp? Should Bill attend the camp?
Sally is looking to buy a five-year-old, used Mustang convertible. It will cost her $9,500.00 to buy the car plus insurance. She believes this car will make her very popular at school, make it easier for to get dates, and will bring a lot of attention her way. Her parents are willing to provide her with a ten-year-old station wagon and will pay for all costs of this car except the gas Sally uses. Sally has $5,000.00 in her savings account and monthly income of $450.00. Which car should Sally get?
Claudio wants to become a teacher. He wants to go to the best school in the state which has a great School of Education. This School of Education has a very positive national reputation and places 85% of its graduates in good paying teacher positions. However, since the school is located on the other side of the state, Claudio would not be able to go to school and live at home. He would have to pay tuition and the cost of living in a dorm, food, and other expenses. The university in his hometown has a School of Education which has an average reputation and places 75% of its graduates in jobs. However, the average starting pay for teachers who attend the local university averages $3,500 a year less than the starting pay from teachers who attended the university with nationally known School of Education. Claudio would have to borrow money to attend the better school and will have about $15,000 in debt after finishing college. Should he do this?
Situation one: Absolutely!!! There is a growing need for officials to work games. Once Bill gets known in officiating circles, he will have opportunities to make thousands of dollars in a basketball season. Even if Bill borrows the money to attend the camp and needs to buy some basic equipment, he will come out ahead in the long run. The opportunity costs is the cost of the camp which is $350.00.
Situation two: She should take the station wagon because she can’t afford the Mustang convertible. She also is making assumptions about her improved social life which may or may not be true. The opportunity cost will be possibly being less popular and getting fewer dates
Situation three: Yes!!! Assuming he is a good teacher, he is very likely to get a job with a high starting salary. Most likely, he will earn significantly more money over his teaching career if he attends the university with a nationally known school of education. While he will be behind in the beginning of his career, he should make this difference up over the length of a long teaching career. Claudio could also apply for scholarships or work-study jobs to help offset some of his debt while attending school. The opportunity cost is being in debt and not being able to do some things for a while since he is in debt.