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23 October, 23:13

Pete is a recent finance graduate who has two passions: music and finance. Upon graduation, he was offered an opportunity to join a struggling rock band with a lot of potential, or a job at a large well-established financial services company. By joining the band, he will forego which of the following?

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  1. 24 October, 02:19
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    He will forego 'job at a large well-established financial services company'

    Explanation:

    Pete's opportunity cost of 'joining band' is - 'job at huge financial service company'.

    Opportunity cost is the cost of next best alternative foregone while choosing an alternative.

    Eg: If I like rice & noodles, opportunity cost of eating rice is the other best option i. e noodles.

    Similarly: Pete having 2 options of following Music or Finance; deciding to join band - has opportunity cost as the other option i. e 'job at huge financial service company'
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