Zach has the following information to evaluate-his current salary of $76,000 versus total revenues of $120,000 and expenses of $72,000 from starting a new business. How much is the opportunity cost associated with staying at his current job?
A)$76,000
B)$4000
C)$48,000
D)$192,000

Question

Quizplus · Accepted Answer

The opportunity cost is what Zach would be giving up by staying at his current job instead of starting the new business. In this case, the opportunity cost is the potential profit from the new business, which is calculated by subtracting the expenses from the revenues: $120,000 - $72,000 = $48,000. Therefore, the best choice is C. Option A is incorrect because it represents Zach's current salary, not the opportunity cost. Option B is incorrect because it does not take into account the potential profits from starting the new business. Option D is incorrect because it represents the sum of the total revenues and expenses, but does not tell us anything about the opportunity cost associated with staying at Zach's current job.

Zach Has the Following Information to Evaluate-His Current Salary of $76,000