Your aunt is thinking about opening a hardware store. she estimates that it would cost $500,000 per year to rent the location and buy the stock. in addition, she would have to quit her $50,000 per year job as an accountant.1. what is the opportunity cost of something? a. the time it takes to do somethingb. what must be given up to acquire itc. cost to produce itd. what you pay2. your aunt’s opportunity cost of running a hardware store for a year is your aunt thought she could sell $510,000 worth of merchandise in a year.3. true or false: your aunt should open the store.

The answer is 1 B, 2.the giving up of her $50,000 per year job as an accountant, 3.True

Explanation:

The opportunity cost can be define as a sacrifice whether on the side of an individual, a firm or government. The opportunity cost is the forgone alternatives in order to acquire a product or a services. To an individual, who aims at maximizing his utility from his limited available resources he will have to allocate these limited resources to those wants that are most important. Opportunity cost help an individual to make a judicious use of his scarce resources. .The opportunity cost is also important to a firm because the firm has to choose to allocate its limited available raw materials in the production of a particular product with high demand at the expense of other products with low demand in order to maximize profit.

The opportunity cost to the government is in the preparation of the budget, the government can decide to allocate the available resources to the sector of the economy which is of high priority such as education at the expense of other sectors of the economy.

answer; capital structure decision;