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15 January, 16:55

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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  1. 15 January, 17:20
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    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.
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