1. tiger woods dropped out of stanford university to pursue a career as a professional golfer.
at the time he left the university, he was majoring in finance and would have been employable as a stock broker or financial analyst earning $150,000/year. when he turned pro, he immediately signed an endorsement contract with nike for $20 million.

a. what was tiger’s opportunity cost for becoming a professional golfer?
b. opportunity costs occur when decisions are made. economists recommend that those decisions be based on what?
c. are opportunity costs always measured in dollar terms? explain.
d. you will spend about 90 minutes on this exam. what is your opportunity cost for spending your time in that manner?

2. you plan to attend college. answer the following questions:

a. what are the explicit (cash out of pocket) costs of attending college? what are the implicit (lost opportunities) of attending college.
b. you will not have any current rock stars or major league ball players attending your classes. why not?
c. assuming everyone has equal intelligence, college will still not be the right choice for everyone. using the concept of opportunity costs, explain why.

1.

a. It is the amount of income that he may have gained in case he finished his Bachelor majoring in Finance ($150,000/Year).

b. The decision should be based on the economic profit once a decision is made. In other words, all the benefits and costs including explicit costs and implicit costs (opportunity costs) are taken into consideration so the choice with highest economic profit is chosen.

c. No, they are not. It may be measured in various terms including personal values, time, personal feelings, personal health...In fact, opportunity costs are the costs which are lost in once a decision is made, these costs are not necessarily measured in quantitative form, instead, they may be measured in qualitative form.

d. The opportunity costs may be in various forms such as: payment you may earn from working part-time job in these 90 minutes; watching your favorite sport game and getting exciting; go to the gym to get fit

2.

a. Explicit cost: tuition fees and other costs relating to the study such as books, accommodation, documents printing... Implicit cost: payment you may earn by starting full-time working instead of going to college

b. Because it will not bring them economic profit. In fact, going to college causes them huge opportunity cost ( even bigger then the explicit cost which is mainly the tuition fees) relating to the huge income sacrifice, the time they spend to practice to get better in their career ( which will result in higher income in the future) instead of going to classes.

c. An intelligent person is not necessarily a person perform their best in college. It may be a person that is best in sport, cooking, singing. Thus, they should be specialized in the industry/field that they are the best of themselves to minimize the opportunity cost and maximize benefits. Thus, college is not always the right choice for everyone.  

Explanation:

Explanation is given right in each answer.