Your uncle is thinking about opening a hardware store. He estimates that it would cost Rs.5,000,000 per year to rent the location and buy the stock. In addition, he would have to quit his Rs500,000 per year job as an accountant.   A.    Define opportunity cost.                                                                                             (2 Marks) What is your uncle’s opportunity cost of running the hardware store for a year? If your aunt thinks he can sell Rs. 5,100,000 worth of merchandise in a year, should he open the store? Explain.

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter3: Benefits, Costs, And Decisions
Section: Chapter Questions
Problem 3.2IP: Concert Opportunity Cost 2 You were able to purchase two tickets to an upcoming concert for $100...
icon
Related questions
Question

Your uncle is thinking about opening a hardware store. He estimates that it would cost Rs.5,000,000 per year to rent the location and buy the stock. In addition, he would have to quit his Rs500,000 per year job as an accountant.
 
A.    Define opportunity cost.                                                                                             (2 Marks)
What is your uncle’s opportunity cost of running the hardware store for a year? If your aunt thinks he can sell Rs. 5,100,000 worth of merchandise in a year, should he open the store? Explain.                                  

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Organizational Culture
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax