Week 1 Essay: Opportunity Cost of Not Attending Colleges (TCO 1 & 3)
The economy is going through some difficult times and not only are employees
feeling the sting but so are students enrolled in MBA programs. Students who seek out
eh MBA program is looking for a return on their investment. The article that I used
relates to TCO 1 & 3 because it references to the opportunity cost of pursuing and
completing an MBA. I think that this article relates to TCO 1 because it seeks answers
for what needs to be produces by the institution to decrease opportunity cost of students.
Institution wants students to be enrolled and they don’t want another institution to have
the opportunity to enroll students. If the opportunity cost to attend college is high it will
cause enrollment to be decreased and degree completion will decrease as well.
Institutions have to look at how to efficiently achieve this goal and if it includes raising
tuition cost that is what has to be done. Price has a great influence on choice.
This article looked at how to reduce opportunity cost by doing a statistical
analysis. This article looked at whom the opportunity cost affected and demographic
groups, competitive and less competitive business schools were used. Opportunity cost is
not easy to measure and therefore it must be predicted. It is helpful for the institution to
know how many students have full employment. This information helps the institution
determine the likelihood of those students who will enroll full-time or part-time. Capital
is a necessity because that is the only way students may attend college and the institution
and function. The students are the consumers because they are obtaining their MBA.
A multi-variant regression equation was used that related earnings of the students
based on their education, work experience, race and gender. The opportunity costs were
based on full-time, part time study or no study. Based on a survey in 1994 graduate
management school cost $18,000 more for a full-time student than a part-time student.
The study showed that 56% of income was loss by students attending management school
than those not attending. A part-time student used only $3,000 to attend management
school. When comparing by gender it was discovered that women earned less in the job
market but the time and effort used was close to the men. Race comparison revealed that
blacks have higher opportunity cost than whites based on full time enrollment, but they
have lower opportunity cost based on part time attendance. The information in the article
suggested that lowering the cost of attend will decrease opportunity cost and this will
cause a shits toward full-time attendance. If the opportunity costs are lower then the
full-time proportion is increased. The following chart provides data of opportunity cost.
This article relates to TCO 3 because we could use the production curve to
determine the output of part-time vs. full-time enrollment in an MBA program. The law
of increasing cost is very important because it looks at the outcome of increasing tuition
cost. If the cost of tuition is raised and full time students are currently enrolled in an
MBA program the more likely they will pay the new cost of tuition. Opportunity cost
allows a person to have two choices. The MBA student may attend full-time or part-
time. It would be appropriate to say that if a student couldn’t afford full-time enrollment
her or she would take the second alternative which would be part-time. The institution
has the opportunity cost to keep tuition rates the same or raise them and risk loosing
enrollment of new students. The institution is the producer and it needs to make sure the
students choose their institution as an opportunity cost.
Mark Montgomery, Irene Powell. “The Effect of Tuition and Opportunity cost on the
Pursuit and Completion of a Graduate Management Degree.” Journal of Education for
Business. Washington: 2006. 190 -201.
&TS=1157929488&clientId=44941. Retrieved September 7, 2006.