kilometre of road repair. Note that 0.5 is the slope of the green budget
line.
The concept of opportunity cost is pervasive in economics. Whenever
choices are limited by scarce resources, the decision to have more of one
thing implies that we must give up something else. See Applying Economic
Concepts 1-1 for an example of opportunity cost that should seem quite
familiar to you: the opportunity cost of getting a university degree.
Applying Economic Concepts 1-1
The Opportunity Cost of Your University Degree
The opportunity cost of choosing one thing is what must be
given up as the best alternative. Computing the opportunity
cost of a college or university education is a good example to
illustrate which factors are included in the computation of
opportunity cost. You may also be surprised to learn how
expensive your university degree really is!*
Suppose that a bachelor’s degree requires four years of study
and that each year you spend $6500 for tuition fees—
approximately the average at Canadian universities in 2019—
and a further $1500 per year for books and materials. Does this
mean that the cost of a university education is only $32 000?
Unfortunately not; the true cost of a university degree to a
student is much higher.