Opportunity cost as net forgone earnings

Steps:

• Identify the alternative: unskilled job pays $16,000 per year for two years, totaling$32,000.
• Calculate earnings during apprenticeship: $10,000 per year for two years, totaling$20,000.
• Determine net forgone per year: $16,000 -$10,000 = $6,000.
• Total opportunity cost: 2 × $6,000 =$12,000.

Why B is correct:

• Opportunity cost equals forgone net income from the best alternative, per economic definition: $32,000 alternative minus$20,000 earned = $12,000.

Why the others are wrong:

• A: Ignores the full two-year period and net calculation.
• C: Confuses post-apprenticeship earnings with the two-year cost.
• D: Overstates by using gross forgone earnings without subtracting apprenticeship pay.

Final answer: B