Opportunity Cost Essay

A movie shop owner has the opportunity to work in a large textile industry where he will be earning a net salary of $500 per month. However, the entrepreneur decided to be working in his movie shop consequently making him lose $500 he would have earned from the textile the textile industry. The $500 net salary foregone is the implicit cost. Therefore the accountant of the movie shop will not consider $500 as a cost, since there is no physical cash outflow from the business. Economies of scale signify a decline in long-run average as well as marginal outlays because of the expansion in the operating capacity of an organization (Tovar&Wall, 2012). References Chodorow-Reich, G. , &Karabarbounis, L. The cyclicality of the opportunity cost of employment.