Question

The owner of a small retail store does her own accounting work. How would you measure the opportunity cost of her​ work? The opportunity cost of the​ owner's accounting work is

Answer 1

Her opportunity cost is what she could have earned in that occupation instead of doing her own accounting work.

Explanation:

Opportunity cost refers to the loss of any gain that can be attained from the alternatives that are available, when one alternative is chosen by a person. For instance consider that a person has decided to go for a movie during his free time. The cost she spent for the movie can be spent to the things that can be more useful. For example investing in something which is the opportunity cost here.

The opportunity cost is also called as economic cost. It can be calculated by measuring the amount that the time of the owner to be obtained from the next best usage. For instance the owner can consider doing accounting work to some other firm than doing for his own firm. Thus he opportunity cost would be the amount that she can earn from the other firm than doing accounting work for her own company.