Suppose you have recently graduated and have been offered a salary position at a reputable accounting firm of $125,000 (including all benefits)per year. After much consideration, you turn down the offer to start your own accounting firm. You pay yourself $75,000 (including all benefits)a year. Which of the following represents the opportunity cost of your time?

Question

Quizplus · Accepted Answer

The opportunity cost of your time is the value of the next best alternative foregone, which in this case is the salary position you turned down at the accounting firm, amounting to $125,000.

Suppose You Have Recently Graduated and Have Been Offered a Salary