Scenario 12-2
Chelsea wants to start her own Christmas ornament business.She can purchase a suitable factory that costs $100,000.Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 12-2.Suppose Chelsea purchases the factory using her own money.What is Chelsea's annual implicit opportunity cost of purchasing the factory?

Question

Quizplus · Accepted Answer

The implicit opportunity cost of using her own money is the return that Chelsea would have earned if she had invested the money instead.

Since she currently has $150,000 earning 3 percent interest per year, her implicit opportunity cost is:

$150,000 x 0.03 = $4,500

Therefore, the best answer is B, $3,000, since it's the closest option to the implicit opportunity cost calculated.

Scenario 12-2 Chelsea Wants to Start Her Own Christmas Ornament Business.She Can