Scenario 14.1
A worker in Firm A earns an income of $5,000 per month. He has been offered a job in Firm B where he will be paid a salary of $7,000 per month.
-Refer to Scenario 14.1. If the worker joins Firm B, his opportunity cost is:
A)$7,000.
B)$5,000.
C)$2,000.
D)more than $5,000 but less than $7,000.
E)less than $2,000.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the next best alternative forgone. In this case, the worker's opportunity cost of joining Firm B is the salary he would have earned if he had stayed in Firm A, which is $5,000 per month. Therefore, the answer is B.

Scenario 14.1 A Worker in Firm a Earns an Income of $5,000