Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
$75,000
B
The potential profits of the business venture
C
$0
D
The cost of starting the business
Understanding the Answer
Let's break down why this is correct
Answer
Opportunity cost is the value of what you give up when you make a choice. In this case, if the entrepreneur decides not to take the full-time job that pays $75,000, the opportunity cost is that salary. This means that by choosing to invest in a new business venture instead of working for that salary, the entrepreneur is missing out on the guaranteed income. For example, if the business venture does not make enough money to match or exceed the salary, the entrepreneur might struggle financially. Therefore, the decision to invest comes with the cost of the steady income that could have been earned from the job.
Detailed Explanation
The opportunity cost is what you give up when you make a choice. Other options are incorrect because Some might think the profits are the cost, but those are future earnings, not what is given up now; Thinking there is no cost ignores what is sacrificed.
Key Concepts
trade-offs
next best alternative
Topic
Understanding Opportunity Costs
Difficulty
medium level question
Cognitive Level
understand
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