What is the opportunity cost when calculating profit, considering explicit costs involved in a business operation?

Opportunity cost is what you give up when you make a decision, especially in business. When calculating profit, you look at explicit costs, which are the actual money spent on things like rent, salaries, and materials. However, opportunity cost also includes the value of what you could have earned if you chose a different option instead of your current business. For example, if you invest $10,000 in your bakery, the opportunity cost might be the salary you could have earned if you worked at a different job instead. So, when figuring out profit, it’s important to consider both the money spent and the potential gains you miss out on by not choosing another path.