Suppose you have 1000 rupees which you can invest in your family business. Apart from this, you can also deposit in a bank giving 7% p.a. interest or in a bond giving 10 % p.a interest. You to invested it in family business. What will be the opportunity cost?

70 rupees 100 rupees 170 rupees 90 rupees

100 rupees

Opportunity cost is the cost of next best alternative foregone. Had you not invested in family business, you would have gone for the bond which gave 10 percent return. This is the next best alternative. The return you could have earned is 10 percent on 1000 which is 100. But now you can’t earn it as 1000 is invested in family business. So 100 rupees is the opportunity cost.