Ask Question
BusinessBusiness
2 April, 02:13

Carlos plans to start a new dry cleaning business. For that he purchased a space which costed him $100,000. For that he withdrew his savings worth $50,000 and borrowed the remaining $50,000 from a bank. His savings was earning him 3% interest per annum and the banks charges him 6% interest per annum. Based on this what would be Carlos opportunity cost of purchasing the space

+1
Answers (1)
  1. 2 April, 03:23
    0
    Answer: $1500

    Explanation: As per the theory of microeconomics, opportunity cost is the cost of loosing the profits from the best alternative that was not selected. In simple words, it is the real cost of output foregone.

    Usually opportunity cost is used to describe relationship between scarcity and choice.

    In the given case Carlos was earning interest on savings but rather than that he invested it in the business. Therefore : -

    opportunity cost = $50,000 * 3% = $1500
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Carlos plans to start a new dry cleaning business. For that he purchased a space which costed him $100,000. For that he withdrew his ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Under which component of the business model would people and culture fall? Multiple Choice Key customer Value proposition Environment System capabilities
Answers (1)
How is a line of credit similar to a credit card
Answers (1)
Mighty safe fire alarm is currently buying 50,000 motherboard from motherboard, inc. at a price of $65 per board. mighty safe is considering making its own boards.
Answers (1)
When markets and governments decide how wealth, money, and goods and services are distributed, what basic economic question are they answering?
Answers (1)
Jacob decides to sell his well-known dry cleaning business to Fred. In the sale agreement for the business, there is a clause stating that Jacob cannot open a competing dry cleaning business within ten miles of the business he is selling to Fred.
Answers (1)
New Questions in Business
Job HE-65 at Wilson Manufacturing Inc. required $300 of direct materials and 15 direct labor hours at $10 per hour. The company's estimated total overhead cost for the year was $900,000 and estimated direct labor hours were 30,000.
Answers (1)
The automobile industry in a developing country has very few sellers. If one automobile company raises the prices of its trucks by a certain amount, other automobile companies in the industry follow by raising prices by a similar amount.
Answers (2)
Cleo writes a check for $100 drawn on debit & credit bank and presents it to elegant jewelers for payment. if the check is not backed by sufficient funds and intent to defraud can be proved, cleo may be prosecuted for
Answers (1)
Privatization is a way to a. shrink the federal budget by selling government services or property in the private sector. b. reduce government costs by relocating government programs to private groups or corporations. c.
Answers (2)
Gonzalez Company acquired $200,000 of Walker Co., 6% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $70,000 of the bonds for 97.
Answers (1)
Home » Business » Carlos plans to start a new dry cleaning business. For that he purchased a space which costed him $100,000. For that he withdrew his savings worth $50,000 and borrowed the remaining $50,000 from a bank.
Sign Up Forgot Password?