Question

Suppose that you could either prepare your own tax return in 12 hours or hire a tax specialist to prepare it for you in 3 hours. You value your time at $25.00 an hour; the tax specialist will charge you $60 an hour. The opportunity cost of preparing your own tax return is

Answer 1

$300

Step-by-step explanation:

Opportunity cost also known as Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

By choosing to do my tax, i am forging the value of my time which is $25 per hour.

If i do my returns i would be spending 12. total value of time = 25 x12 = 300

the amount i would pay the specialist is my explicit cost