What are the monetary, non-monetary, and opportunity costs of each of these jobs? Job A. This job involves writing advertisements and creating art to go along with the text. It pays well, though...
What are the monetary, non-monetary, and opportunity costs of each of these jobs?
Job A. This job involves writing advertisements and creating art to go along with the text. It pays well, though advancing in this field takes many years. The employer tells you that you are likely to work a lot of overtime hours. The office is located far across town, involving a long bus ride or drive. The people at the office seem very nice. The work atmosphere is formal, as is the dress code.
Job B. This job involves filling out and filing paperwork. The entry-level pay is low, but there are many opportunities within the company. The employer tells you that the company prefers to "promote from within," or fill vacant jobs by promoting people who already work at the company. The building is a short bus ride, bike ride, or walk from where you live. The people at the office are friendly and helpful, and the whole office has a casual atmosphere.
Monetary costs are the costs that are involved in a job that can be expressed in terms of dollars and cents. There are not very many such costs for either of these jobs. The monetary costs involve clothing and transportation. In Job A, there will be relatively high monetary costs since it is far from where you live and the dress code is formal. Job B will be cheaper both in terms of transportation and clothing.
Non-monetary costs are costs that cannot be expressed in terms of dollars and cents. These are things like the time that is spent in getting to the job. Clearly, the non-monetary costs will be higher for Job A because it is far from where you live. You might also say that the non-monetary cost will be higher because it will take longer to move up the corporate ladder. Job B has the non-monetary cost of being less interesting in terms of the work you will be doing.
Opportunity cost is the value of what you could be doing instead of doing the thing that you chose to do. There are a number of opportunity costs involved here. For Job A, there is the opportunity cost of all the things you could be doing instead of commuting to the job. There is the opportunity cost of not being able to do various sorts of fun activities during the time you are working overtime. For Job B, there is the opportunity cost of not getting paid as much.
Thus, each job has its own set of costs.