Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon also quit his job as a waiter, which paid $20,000. According to an economist, Jaxon's opportunity cost of opening the tattoo parlor equals $20,900.

Question

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The opportunity cost of opening the tattoo parlor is the value of the next best alternative that Jaxon gave up, which is his job as a waiter that paid $20,000.

Jaxon Borrows $10,000 from a Bank and Withdraws $20,000 from His