Homework Answers
Solution
Answer – Opportunity Cost
Explanation:
Opportunity cost refers to the benefit that has to be foregone when choosing one alternative over another. Alternatively, it also refers to the cost of the next best alternative investment opportunity.
For the given situation,
The opportunity cost for Matthew in opting to start his own IT business is the salary of the current job, which would be lost when he quits. Hence, the salary earned at his current job is an opportunity cost.
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