Matthew is a computer analyst who earned $200,000 in 2016. At the beginning of 2017, Matthew wanted to pursue a new career so he quit his job and opened a bakery. In his first year, he made total revenue of $50,000. The information on the right gives details of Matthew's first year in the bakery business. What is Matthew's opportunity cost of production?

Question

Manuel Koch

Business

27 October, 17:28

Matthew is a computer analyst who earned $200,000 in 2016. At the beginning of 2017, Matthew wanted to pursue a new career so he quit his job and opened a bakery. In his first year, he made total revenue of $50,000. The information on the right gives details of Matthew's first year in the bakery business. What is Matthew's opportunity cost of production?

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Answers (1)

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Elliott Solomon · Answer 1

Matthew's opportunity cost of production is $200000.

Explanation:

An opportunity cost is the earning from the best alternative available.

Matthew was working as a computer analyst where his salary was $200000 which is his best alternative this means that the opportunity cost of the opening bakery for Mathew is $200000.

Therefore, Matthew's opportunity cost of production is $200000.