Question

An unemployed person, Ramesh is looking out for a job. Ramesh received 2 job offers: one for ₹ 20,000 from ICICI Bank and other offer of ₹ 15,000 from HDFC Bank. What is the opportunity cost for Ramesh if he accepts the offer of ICICI Bank?

Answer 1

The opportunity cost for Ramesh is ₹ 15,000.

Opportunity cost refers to the value of the next best alternative foregone. If Ramesh accepts the job offer of ₹ 20,000 from ICICI Bank, he will have to sacrifice the job offer of ₹ 15,000 from HDFC Bank. Therefore, his opportunity cost is ₹ 15,000, which is the value of the next best alternative foregone.