Mark quit his job as a salesman where he made $43,000 per year to start his own t-shirt making business.His business expenses are $6,000 per year on rent,$12,000 per year on supplies,and $4,000 per year on part-time help.As for his personal expenses,his apartment costs him $4,800 per year and his personal bills are an extra $1,200 per year.Which of the following is NOT part of the opportunity cost of running his business?
A) his apartment costs
B) his personal bills
C) his part-time labor costs
D) his apartment costs and his personal bills

Question

Quizplus · Accepted Answer

The opportunity cost of running his business refers to the cost of the next best alternative that he is giving up by choosing to run his t-shirt making business. His personal expenses such as his apartment and personal bills would still exist even if he did not start his business, so they are not considered opportunity costs. The expenses directly related to the business, such as rent, supplies, and part-time labor costs, are opportunity costs because the money could have been used for something else if he did not start his business. Therefore, the answer is D, as his apartment costs and personal bills are not part of the opportunity cost of running his business.

Mark Quit His Job as a Salesman Where He Made