Maia is thinking of opening a restaurant. She forecasts revenues of $200,000 per year and explicit financial costs of $140,000 per year. She can pursue this opportunity only if she quits her current job as a hair stylist, where she earns $45,000 per year. She would also need to invest $110,000 of her savings to set up the restaurant-funds on which she would otherwise be earning a 6% return. Based on this information, what are Maia's implicit opportunity costs?

Question

Quizplus · Accepted Answer

Maia's implicit opportunity costs include the salary she foregoes by quitting her job ($45,000) and the interest she would have earned on her savings ($110,000 * 6% = $6,600), totaling $51,600.

Maia Is Thinking of Opening a Restaurant