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Opportunity Costs of Education and Oil Industry

Opportunity Cost of Getting Education

An opportunity cost refers to the cost that is usually the next best option available to a person amongst a set of mutually exclusive choices. This cost which is a fundamental concept of economics describes the basic relationship that exists between scarcity and choice where individuals are faced with the choice of using scarce resources efficiently. Opportunity costs are not necessarily restricted to monetary or other financial costs as they can take the form of lost time, lost energy, or forgone outputs.

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For example, a person who has $10 has the option of buying either a pair of shorts or a shirt. If they decide to buy the pair of shorts then the opportunity cost will become a shirt and if they decide to buy the shirt the opportunity cost will become a pair of shorts. Opportunity cost, therefore, involves selecting one option or item as the choice which means that individuals cannot choose all options (Frank, 2005).

The approximate dollar cost of getting higher education in many westernized countries around the world averages between $10,000 and 15,000 dollars per year. The dollar cost of such education reflects the opportunity cost of an individual taking the course as they would be denying themselves the opportunity to for example place the money in a bank where it would accrue interest over some time allowing them to gain some returns from such a decision.

The opportunity cost of paying for education would also mean that an individual would forgo the decision to invest the $10,000 into the stock market making it difficult for them to earn any returns on their investment. If the person decides to pay for the course, the personal opportunity cost will be that once the person is through with their education, they will be able to gain useful employment accompanied with a good salary which will see them gaining back their initial investment (tuition fees) which they put into their education. Gaining employment therefore becomes the personal opportunity cost of paying for an educational cost within an institution of higher learning (Frank, 2005).

Opportunity Cost of Oil Extraction

There is the opportunity cost of extracting heavy crude oil from the sands of Alberta, Canada where the crude oil is found 1,200 feet underground. The cost of extracting the heavy crude oil will involve using pumping steam to extract oil syrup of the crude oil which will then be placed in industrial-sized washing money to separate the crude oil. The opportunity cost of extracting the heavy crude oil from the sand in Alberta is $25 a barrel which is high when compared to the $6 a barrel that is spent on extracting and refining light crude oil.

The opportunity cost that will go into preserving the northern part of Alberta, Canada against any heavy crude oil extraction would include the amount of greenhouse gas emissions released into the atmosphere from the heavy crude oil extraction which is estimated to be three times a barrel, the loss of sand and the deforestation of trees by Total SA to gain access to the oily sand (Rittenberg, 2008).

With regards to whether the land is being properly used, the energy minister for Alberta has defended the decision to fully exploit the heavy crude resources in the sands of Alberta by stating that while there are substantial costs used to extract the oil, the benefits have proven to be greater given that Alberta, Canada is the largest foreign supplier of oil to the United States and other countries in the world.

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This view is not however supported by many of the residents in Alberta who view the extraction exercises as detrimental to the environment. The destruction of the forest to gain access to the oily sands leads to the destruction of vital ecosystems that prevent pollution in the environment. Such destruction might lower the number of habitats in the Alberta region that are necessary to maintain a balance of the environment. The continued cutting down of trees might therefore lead to a situation similar to that of the BP oil spill where millions of ecosystems will be ruined, further degrading the atmosphere and the ozone layer (Rittenberg, 2008).

References

Frank, R.H., (2005). The opportunity cost of economics education. Web.

Rittenberg, L., (2008). Principles of microeconomics. New York: Flat World Knowledge.

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StudyCorgi. (2021, February 2). Opportunity Costs of Education and Oil Industry. Retrieved from https://studycorgi.com/opportunity-costs-of-education-and-oil-industry/

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StudyCorgi. 2021. "Opportunity Costs of Education and Oil Industry." February 2, 2021. https://studycorgi.com/opportunity-costs-of-education-and-oil-industry/.

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StudyCorgi. (2021) 'Opportunity Costs of Education and Oil Industry'. 2 February.

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