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opportunity cost

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Bob runs a hardware store in Montana. His inventory costs him $75,000. Prior to opening his hardware store, Bob worked as an investment banker earning $175,000 per year. He pays his employees $150,000 per year. Economists would say Bob's cost of running the hardware store is $225,000 per year.

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Bob loses the $175,000 if he had continued working as an investment ...

Solution Summary

An opportunity cost is depicted for running a store.