Your aunt is thinking about opening a hardware store. She estimates that it woul

Question

Your aunt is thinking about opening a hardware store. She estimates that it would cost $400,000 to rent location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant.
Your aunt’s opportunity cost of running a hardware store for a year is ____. (Insert in the blank area above)
Suppose your aunt thought she could sell $420,000 worth of merchandise in a year.
Should your aunt open or not open the store. Your aunt is thinking about opening a hardware store. She estimates that it would cost $400,000 to rent location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant.
Your aunt’s opportunity cost of running a hardware store for a year is ____. (Insert in the blank area above)
Suppose your aunt thought she could sell $420,000 worth of merchandise in a year.
Should your aunt open or not open the store.
Your aunt’s opportunity cost of running a hardware store for a year is ____. (Insert in the blank area above)
Suppose your aunt thought she could sell $420,000 worth of merchandise in a year.
Should your aunt open or not open the store.

Explanation / Answer

Auntsbopporrunity cost is the salary forgone =$50000

From the opportunity cost is greater than the profit she makes $20000.

Therefore she makes a loss in relation to her salary.

Could earn better with job as accountant.

Therefore should not open the store.

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