Opportunity Cost of Going to College, Marginal Analysis Essay

Opportunity Cost of Going to College, Marginal Analysis - Essay Example This research will begin with the statement that opportunity cost in economic terms is the cost of forgoing or sacrificing the consumption of one commodity or service in order to consume and derive utility from any other service or commodity. For computing opportunity cost of any commodity one has to take into account the next best substitute that has to be forgone or sacrificed. Under economies we generally compute opportunity cost in monetary terms. Considering the opportunity cost of going to college the next best alternative that can be sacrificed is the salary that an individual can get if he instead chooses a full time job. Such compromises are made each year. If the overall degree course the individual loses an annual salary of $80,000 in the three or four years. The commodities and services of opportunity cost for attending college are listed below: Monetary cost of college: Attending college require a minimum amount that has to be spent on food, clothing. Transportation costs: The student has to spend some amount of money each for attending. For the travelling expenses opportunity costs does not remain same and fluctuates frequently. This is because the student might choose not to attend college someday or he may choose to attend extra days than he usually does due to some extra class or some particular college meeting. Income through sports: If the student is an athlete he may earn huge through various tournaments. But such a job mostly requires the sportsman to travel a lot. In that case he may have to give up college. Clearly he has to choose between attending college and becoming a professional sportsperson (Gwartney, Stroup, Sobel and McPherson, 2009, p.29). Students dependent on parents: All the students attending college do not have to earn for their expenses. Sometimes students are dependent on their parents who take the responsibility of paying for all of their son’s or daughter’s expenses. In that case opportunity cost may be counted as zero (Gwartney, Stroup, Sobel and McPherson, 2009, p.29). Income in entertainment industries: Students who work as entertainers or pursue any other work in the entertainment industry have to spend a lot of time in the shoots or they may also have to travel abroad quite often. In that case too they have to choose between college and their work (Gwartney, Stroup, Sobel and McPherson, 2009, p.29). Missing T.V. shows: Attending college and pursuing a degree course also requires a student to study harder and appear for examinations. Thus in this respect the student would have less time for television and his favorite shows. In some cases while studying for college exams he might also have to miss out a big soccer match. Less leisure time: Attending college and then going for part time jobs- in this day to day busy schedule the student may not have any time left for leisure or spare time. Hence for attending college the student has to sacrifice leisure or any other activity that he used to perform during spare time. Higher Education: Attending colleges the student gets a professional degree. This may help the individual to earn higher income once he finishes college education than what he can earn currently by leaving college. 2. Marginal Analysis Decision taken on a margin Marginal analysis is a very important concept under microeconomics leading to efficient allocation of resources (McGuigan, Moyer and Harris, 2011, p.41). ‘Decision taken on a margin’ refers mainly to economic decisions. Alterations on the available amount of resources lead to such marginal decisions. It may be similar to decision making as simple as spending hours or money. Such decisions are assume to yield better output for a number of reasons. Firstly the decisions are made with full information on resources and shortages. Preferences and indifferences of an individual are also taken into account while making decisions. The involvement of analysis helps

The Importance of Analysis and Analytical Skills to the Manager Making Essay

The Importance of Analysis and Analytical Skills to the Manager Making Decisions in Business - Essay Example Specifically, the study evaluates the structured analytical approach to problems solving and discusses the concept of decision making. This is then followed by a critical analysis of three types of management decision making methods; project plan, financial modeling and diagrammatic representation. These methods are then discussed together in relation to management, before arriving at a conclusion on the study. Structured Analytical Approach to Problem Solving Management in the business world often presents with complex problems that call on managers to develop better approaches to problem solutions. Bonem (2011, p. 1-2) discusses the need for the structured analytical approach to solving problems, explaining that the aging and retiring of the baby boomer (or elderly) generation of workers takes away the invaluable experience needed in decision making. Thus, the author argues that the present managerial aspects of businesses need to adopt a structured analytical approach that will co unter the complexity of organisational problems and the lack of experiential knowledge. The structured analytical approach involves a cyclical multi-stage approach to decision making. Proctor (2010, p. 273) argues that the structured approach involves a number of discernible activities at each stage in the cycle; objective finding, fact finding, idea finding, problem finding, solution finding and acceptance finding. Cooke and Slack (1991) provide for a decentralised approach to executing the cyclic stages. This involves one or more individuals executing the component tasks of decision analysis which include administration, evaluation and implementation. The tow scholars present a normative cyclic approach consisting of 8 stages that involve recognition of the problem, objective setting, understanding the problem, determination of the options available, evaluation of the options established, selecting the most appropriate and effective option, implementation of the solution and monit oring. The structured analytical approach to problem solving as discussed above is a formidable approach to a business context as it addresses the root causes of the problem, identifies and assesses all possible strategic options and settles on the best. It also provides for monitoring, and the cyclic nature allows for awareness and readiness to face organisational problems and challenges which helps to avoid impetuous decision making. However, the approach is idealistic and requires being adapted to the specific context of the business environment (Cooke and Slack 1991). Thus, a manager should manipulate/customise it to suit the specificity in the environment and problem. The Concept of Managerial Decision Making Wang (2010, pp. 28-33) states that decision making is the process of choosing the best alternative to achieve goals in light of finite resources. The author argues that the concept of decision making cannot be divorced from resource allocation and the process of execution as these are dependent on sound decisions for success. Decision making is closely interrelated with problem solving, which Reza and Fahimi (2003, p. 2) define as the process of identifying and filling gaps on a desired and an actual organisational state. The authors relate decision making and structured problem solving, explaining that decision mak