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10 May, 03:24

Jing is considering starting a new business selling organic groceries. It would cost her $350,000 a year to rent store space and buy the groceries from a wholesaler, and she would have to quit her current job and give up a $70,000 annual salary. a. What is Jing's opportunity cost of starting the business? b. If Jing can make an accounting profit of $50,000 a year selling the organic groceries, should she start the business?

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  1. 10 May, 03:44
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    Answer: A. $70,000

    No

    Explanation:

    Opportunity cost is the cost of forgone opportunity. It is what Jing would have earned ($70000) if she didn't start her business.

    Even though Jing is making an accounting profit, her economic profit is negative,$-20,000.

    Economic profit = Accounting profit - Opportunity cost
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