Question

Your aunt is thinking about opening a hardware store. She estimates that it would cost $300,000 per year to rent the location and buy the stock. In addition, she would have to quit her $45,000 per year job as an accountant. What is the opportunity cost of something

Answer 1

Answer:

Opportunity cost = $345,000

Explanation:

Given:

Total investment = $300,000

Give up job revenue = $45,000

Opportunity cost = ?

Computation of opportunity cost:

Opportunity cost refers to the price we are willing to lose to get something.

Opportunity cost = Total investment + Give up job revenue

Opportunity cost = $300,000 + $45,000

Opportunity cost = $345,000