The purpose of this assignment is to analyze the concept of opportunity cost and its application in decision-making. Opportunity cost refers to the value of the next best alternative that is forgone when selecting one option over another. It represents the benefits or gains that could have been obtained from pursuing the alternative course of action.
In this case, we are given two homework assignments, each worth $15. The first homework is due on January 4, 2014, and the second homework is due on January 7, 2014. To assess the opportunity cost associated with completing these assignments, we need to consider what other valuable activities or alternatives could be pursued during the same time period.
One possible alternative is engaging in part-time work, which pays $12 per hour. Let’s assume that completing each homework assignment takes 2 hours. Therefore, the total time required to complete both assignments is 4 hours. If these 4 hours were allocated to part-time work instead, the individual would earn a total of $48 ($12/hour x 4 hours).
Calculating the opportunity cost of completing the first homework assignment, we subtract the monetary benefit of completing the assignment from the monetary benefit of engaging in part-time work. The opportunity cost of the first assignment is $48 (part-time work value) – $15 (value of completing the assignment) = $33.
Similarly, we can calculate the opportunity cost of completing the second homework assignment. Again, if this assignment takes 2 hours to complete, the monetary value of engaging in part-time work during that time period is $24 ($12/hour x 2 hours). Subtracting the value of completing the assignment ($15) from the part-time work value, we find that the opportunity cost of the second assignment is $24 – $15 = $9.
It is important to note that opportunity cost is not always measured in terms of monetary values. Other factors, such as time, effort, and personal preferences, can also be considered in the decision-making process. For instance, if the individual truly enjoys the subject matter of the assignments and gains intrinsic satisfaction from completing them, the opportunity cost may be perceived as lower. On the other hand, if the individual values free time or leisure activities more than the assignments, the opportunity cost may be perceived as higher.
Additionally, the concept of opportunity cost can vary depending on the individual’s circumstances and available alternatives. In this analysis, we have assumed that the only alternative to completing the assignments is engaging in part-time work. However, there could be other valuable activities or obligations that the individual may consider during the same time period, such as attending a social event, studying for another class, or pursuing a hobby.
In conclusion, opportunity cost is a crucial concept in decision-making, as it highlights the benefits that are foregone when making a particular choice. In the context of completing homework assignments, the opportunity cost can be calculated by comparing the benefits of completing the assignments to the benefits of pursuing alternative activities, such as part-time work. The monetary value of the next best alternative represents the opportunity cost, but other factors, such as time, effort, and personal preferences, should also be considered.