Annie quits her $150 000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?

Question

Quizplus · Accepted Answer

The opportunity cost of Annie quitting her job to take care of her parents is at least $150,000, which is the amount she could have earned if she had continued working. Opportunity cost is the value of the next best alternative that is forgone when a decision is made. Since Annie has given up her job, she has forgone the opportunity to earn her salary, which is her next best alternative. Therefore, the opportunity cost of her decision is $150,000 or more. Choice A is incorrect because opportunity cost is not just about salary; it also considers the value of the forgone alternative. Choice B is incorrect because the going rate for home-care providers is not relevant to the opportunity cost of Annie's decision. Choice D is incorrect because satisfaction is not a monetary value and does not represent the opportunity cost of Annie's decision.

Annie Quits Her $150 000-A-Year Job to Take Care of Her