A friend of yours has been thinking about quitting her regular day job and going
ID: 1712596 • Letter: A
Question
A friend of yours has been thinking about quitting her regular day job and going into business for herself. She currently makes
$64 comma 00064,000
per year as an employee of the Ajax Company, and she anticipates no raise for at least another year. She believes she can make
$224 comma 000224,000
as an independent consultant in six-sigma "black belt" training for large corporations. Her start-up expenses are expected to be
$110 comma 000110,000
over the next year. If she decides to keep her current job, what is the expected opportunity cost of this decision? Attempt to balance the pros and cons of the option that your friend is turning away from.
The expected opportunity cost of keeping her current job is
$nothing.
(Round to the nearest dollar.)The expected opportunity cost of quitting her current job is
$nothing.
(Round to the nearest dollar.)
Select all pros of keeping the current job.
A.
Keeping a job means risky gain.
B.
Keeping a job means sure gain.
C.
Keeping a job means working less hard.
Select all pros of quitting the current job.
A.
Quitting a job means larger gain.
B.
Quitting a job means possibly working harder.
C.
Quitting a job means lesser gain.
A tnend of yours has been kin oquiting her regula day job and going nto year She believes she c na-$224 000 a"ndbperdent annsgrna per year as an employee of the Ayax Company and she antcipates no rase ta at least another t consutant in sa-sigma back belit training for lage corporations Her sta-up expenses are expected to be $t10,000 over the neat year she decides to keep her e the pros and eoms of the opsiom that your trend is tuming away fom The expected oppotunity cont of qulting her cunent job iss(lound to e nearest dlar Select all pros of keepeng the current yob Select all pros of quting the cument joExplanation / Answer
1)
opportunity cost is the cost of the alternative in its next best alternative use. Here the person has two options to choose from. one is regular daily job and other one is business for herself.
The current income of the person is $60,000 per year. on the other she believes she can make $200,000 as revenue by spending $120,000.
Thus, total benifit to the person by starting the own business is $80,000 ($200,000-$120,000).
2). The expected opportunity cost of the keeping her job is nothing i.e is $0.
3) The all pros of keeping her current job is keeping a job will be the backup if she doesnt suceed in making her own business so the answer is keep is a job means sure again.
4) The all pros of quitting the current is quitting a job makes the person to work possibly harder because she will get the enough time so the answer is Quitting a job means possibly worker harder