The salary foregone by a person who quits a job to start a business is an example of a(n)
A) sunk cost.
B) opportunity cost.
C) amortizable cost.
D) outlay cost.

Question

Quizplus · Accepted Answer

The salary foregone by a person who quits a job to start a business is an example of opportunity cost. This is because the decision to start the business involves giving up the opportunity to earn the salary from the previous job, which represents the next best alternative use of time and resources. Opportunity cost refers to the value of the best alternative forgone when making a decision.

The Salary Foregone by a Person Who Quits a Job