Which of the following is considered an opportunity cost of buying an existing business?
A) The salary that could be earned working for someone else and the owner's investment in the business
B) Dividends
C) The market value of tangible assets
D) The salary that the business has paid to previous owners

Question

Quizplus · Accepted Answer

Opportunity cost refers to the benefits that are foregone or sacrificed when choosing one option over another. When buying an existing business, the opportunity cost is the salary that could have been earned working for someone else and the owner's investment in the business, as the person buying the business is investing time and money into the business instead of earning a salary from another job or investing their money elsewhere. Dividends and the market value of tangible assets are not considered opportunity costs. The salary that the business has paid to previous owners is also not an opportunity cost, but rather a record of the business's expenses.

Which of the Following Is Considered an Opportunity Cost of Buying