Scenario 13-2
Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-2. Suppose Chelsea purchases the factory using her own money. What is Chelsea's annual implicit opportunity cost of purchasing the factory?

Question

Quizplus · Accepted Answer

The implicit opportunity cost of purchasing the factory is the interest that Chelsea could have earned if she had invested the money instead of using it to purchase the factory. Therefore, her annual implicit opportunity cost is:
$150,000 x 0.03 = $4,500 
Since this is the cost of using her funds for the factory, it is an implicit cost. The correct answer choice is B) $3,000, as it is the only option that is close to the calculated opportunity cost.

Scenario 13-2 Chelsea Wants to Start Her Own Christmas Ornament Business. She