Bob gives up his factory job in order to open a bait-and-tackle shop.The earnings from his factory job represent
A)the hourly wage paid by the shop
B)the marginal cost of running the shop
C)the average cost of running the shop
D)a fixed cost that can vary in the long run
E)an implicit cost of opening the shop

Question

Quizplus · Accepted Answer

The earnings from Bob's factory job represent the salary he was giving up in order to open the bait-and-tackle shop. This is an implicit cost, as it represents the opportunity cost of using his time and resources to run the shop rather than continuing to work in the factory.

Bob Gives Up His Factory Job in Order to Open