Your aunt is thinking about opening a store.She estimates that it would cost

label Economics
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

500000/year to rent the location & buy the stock.In addition she would have to quit her 50000/year job.What is her opportunity cost of running a store for a year?If she thought she could sell 510000 worth of stuff in a year should she open the store?

Mar 14th, 2015

The basic formula for opportunity cost is:

what you are sacrificing / what you are gaining = the opportunity cost

50,000/(510000-500,000)=5

she should open the store

Mar 14th, 2015

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