The salary foregone by a person who quits a job to start a business is an example of a(n) ________. Select one: A. depreciable cost B. outlay cost C. opportunity cost D. sunk cost

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Answer:

C. opportunity cost

Explanation:

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

For example, let us assume that Amanda leaves her job where she earns $250,000 to start a business where she earns $500,000. Her opportunity cost is $250,000 which is the salary she forgoes when she decided to start her business.

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Answer:

C

Explanation:

Opprtunity cost

 Opportunity costs is the benefits an individual, investor or business misses out on when choosing one alternative over another. While financial reports do not show opportunity cost, business owners can use it to make educated decisions when they have multiple options before them. If the foregoes the salary and quits the job for the business he wants to start. He is forgoing the benefit of the salary which is an opprtunity cost, even if the business produces more.

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