Answer:
The opportunity cost is $400000.
Explanation:
The investment amount in shoe factory = $100,000,000
The earning from money market account = $100,000,000 × 1% = $1,000,000
The second option to invest is watch factory and the investment amount is same = $100,000,000
The earning from watch factory = $400,000
The opportunity cost is the cost of the best-forgone alternative. Therefore, if Adidas decides to invest in a shoe factory then the earning of the watch factory is the opportunity cost. So the opportunity cost of Adidas is $400,000
