Business is comprised of three most important economic resources namely capital, land, and labor. Land refers to the physical resource for the production of goods or services, labor can be taken as the human manpower, which transforms the resource into consumer products, while capital refers to the money used to buy both (Amacher & Pate, 2012). Within this is the basic economic concept of building human labor, commonly known as human capital investment.
Investing in education as a human capital increases the worth of a person by making such an individual more capable of contributing to the company. Education of employees raises business operations, which lowers the wastage of resources from untrained employees (Amacher & Pate, 2012). In a more general way, society’s investment in education increases an individual’s value to the society.
Opportunity cost of a degree refers to the highest valued alternative one forgoes to attend college or in other terms it is an option one must forfeit to pursue the best alternative action (Amacher & Pate, 2012). The opportunity cost of college, for example, comprises of both monetary and time costs –the money, which the student could be registering if not attending college, and the time, which the student could be committing on some other pursuits (Amacher & Pate, 2012).
In US system of education, for a four year course, the total average cost of a year’s tuition fees at a public university is about 8,000 US Dollars (USD), excluding books and living costs. This can be considered as the ‘'explicit cost'' for one year at college. However, the opportunity cost of college, or more precisely, the ‘'implicit cost'' is this amount together with what the student ought to have been making while doing another job, but not for the reason of attending college.
References
Amacher, R., & Pate, J. (2012). Principles of Macroeconomics. San Diego, California: Bridgepoint Education, Inc.
