John passes up an offer for a job paying $50,000 a year and, instead, starts his own business. His new business brings in $160,000 in sales during the first year, and his total costs for items such as materials, labor, equipment, shipping, and insurance come to $65,000.
-John's implicit costs are:
A) $50,000.
B) $65,000.
C) $95,000.
D) $115,000.

Question

Quizplus · Accepted Answer

Implicit costs include the opportunity cost of John's decision to start his own business instead of taking the job offer, which is $50,000.

John Passes Up an Offer for a Job Paying $50,000