Suppose you are considering becoming a physician.Your current job has an annual salary of $100,000,but you hate your job.If offered a job as a physician for $90,000 you would be indifferent between your current job and this new job.What is your opportunity cost of staying at your job?

Question

Quizplus · Accepted Answer

In this case,your opportunity cost is equal to $100,000 because you are indifferent between the two positions.Although the accounting cost difference favors your current job,you are willing to accept a $10,000 decrease in salary to switch jobs.Therefore,the true value to you of the alternative job is $100,000.

Suppose You Are Considering Becoming a Physician