Florida Teacher Certification Examinations (FTCE) Subject Area Practice Test

If Mary's parents choose to pay $5000 towards her tuition, what is her opportunity cost?

1. $10,000

2. $15,000

3. $5,000

4. $2,500

The correct answer is: $5,000

The opportunity cost is the value of the next best alternative that is forgone when making a decision. In this scenario, if Mary's parents choose to pay $5,000 towards her tuition, that amount represents a specific resource they have chosen to allocate. To determine the opportunity cost, one considers what could have been done with that $5,000 instead of using it for tuition. If the primary alternative for that amount was something of equal or greater value, then that value would represent the opportunity cost. In this case, paying $5,000 for tuition directly reflects the sacrifice made, as it is the amount that could have been spent on other opportunities, like investing, saving for future expenses, or funding a different educational expense. Choosing $5,000 as the opportunity cost reflects a straightforward assessment of the outlay made and highlights the consequences of choosing between differing potential uses of that money. Thus, selecting this amount accurately quantifies the cost of forgoing other opportunities when parents allocate funds to support Mary's education.