Jacinda quit her job as a blackjack dealer where she made $42,000 per year to start her own florist business. Her business expenses are $14,000 per year on rent, $21,000 per year on supplies, and $9,000 per year on part time help. As for her personal expenses, her apartment costs her $12,000 per year and her personal bills are an extra $6,000 per year. What is Jacinda's opportunity cost of running the business?

Question

Quizplus · Accepted Answer

Jacinda's opportunity cost is the value of the next best choice she gave up, which in this case is her salary as a blackjack dealer. Her salary was $42,000 per year.

Her total business expenses are $14,000 + $21,000 + $9,000 = $44,000 per year.

Her total personal expenses are $12,000 + $6,000 = $18,000 per year.

Therefore, her total annual cost of running her own business is $44,000 + $18,000 = $62,000.

Subtracting her business cost from her salary gives $42,000 - $62,000 = -$20,000.

This means that running her own business costs her $20,000 more per year than she was making as a blackjack dealer.

Therefore, her opportunity cost of running her own business is $42,000 + $20,000 = $62,000.

The best choice is B because it is the only option that matches this calculation.

Jacinda Quit Her Job as a Blackjack Dealer Where She