Ellison Tamara Week 1 Essay

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					Tamara Ellison

ECON 312

      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.

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