Jane is employed at an annual salary of $55,000. She plans to start her own business as a private investigator. If she chooses to open the new business, Jane's foregone salary is a (an):

Question

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The foregone salary of $55,000 that Jane would not earn by choosing to start her own business instead of continuing her employment is considered an opportunity cost. This is because it represents the value of the best alternative forgone, which in this case is the salary she would have earned had she remained employed.

Jane Is Employed at an Annual Salary of $55,000