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Scenario: Accounting and Economic Profit
Rather than put the $100 000 that his grandmother left him in a mutual fund that earns 5% each year,Tommy Wang quit his job,which paid $60 000 per year,and started Wang's Wicker Furniture Store.He rented a showroom for $20 000 for the year,purchased $60 000 in wicker furniture,and incurred costs of $40 000 for sales help and advertising.In his first year,his revenue was $150 000.
-(Scenario: Accounting and Economic Profit)Use Scenario: Accounting and Economic Profit.What is the opportunity cost of Wang's $100 000 inheritance being used to start his business?

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The opportunity cost of Wang's $100 000 inheritance being used to start his business is the income he gave up by quitting his job. His job paid $60 000 per year, so the opportunity cost for one year is $60 000. Therefore, the answer is B) $5 000, which is 5% of $100 000. This represents the difference between the amount Wang could have earned through investing the money and the income he gave up by starting his own business.

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