What is Jim's opportunity cost of operating his own business?
A)the total amount of money he puts into capital equipment
B)the value of his labor that is put into the business
C)the cost of hiring his laborers
D)All of the above are correct.

Question

What is Jim's opportunity cost of operating his own business?
A)the total amount of money he puts into capital equipment 
B)the value of his labor that is put into the business 
C)the cost of hiring his laborers 
D)All of the above are correct.

Quizplus · Accepted Answer

Jim's opportunity cost of operating his own business is the value of his labor that is put into the business. Opportunity cost is the value of the best alternative forgone when choosing one option over another. In this case, Jim could have used his labor to work for someone else and earn a salary, so the value of that forgone salary is his opportunity cost. A and C are not correct as they do not represent the value of the opportunity cost. D is not correct as only B represents the opportunity cost.

What Is Jim's Opportunity Cost of Operating His Own Business