After graduating college Allen wants to start a business selling hats. He has saved $10,000 which will be enough for the startup costs for his online store. His dad thinks that he should instead invest in a mutual fund that pays 3% per year. If Allen will have materials and labor costs of $4,000 per year and expects a total revenue of $5,500 per year, what is his opportunity cost of starting this business? O d. Opportunity costs is not measured in dollars, but only the time he will spend on his business. O c. The opportunity cost is $10,000 because he will have to spend that to start the company. a. There is no opportunity cost because he is making a profit. O b. His opportunity cost is the $300 he would have earned from the mutual fund.
After graduating college Allen wants to start a business selling hats. He has saved $10,000 which will be enough for the startup costs for his online store. His dad thinks that he should instead invest in a mutual fund that pays 3% per year. If Allen will have materials and labor costs of $4,000 per year and expects a total revenue of $5,500 per year, what is his opportunity cost of starting this business? O d. Opportunity costs is not measured in dollars, but only the time he will spend on his business. O c. The opportunity cost is $10,000 because he will have to spend that to start the company. a. There is no opportunity cost because he is making a profit. O b. His opportunity cost is the $300 he would have earned from the mutual fund.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 7.5IP
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