Opportunity Cost Calculation for Harish
1. Current Salary:
- Harish currently earns a monthly salary of 10 lakh rupees.
2. New Job Offer:
- Harish receives a job offer for 8,40,000 rupees per month.
3. Opportunity Cost Calculation:
- Opportunity cost is the benefit that is foregone or sacrificed by choosing one option over another. In this case, if Harish accepts the new job offer, he would be sacrificing the difference between his current salary and the new job offer.
4. Calculating Opportunity Cost:
- Opportunity Cost = Current Salary - New Job Offer
- Opportunity Cost = 10,00,000 - 8,40,000
- Opportunity Cost = 1,60,000 rupees per month
5. Explanation:
- If Harish decides to take the new job offer, his opportunity cost would be 1,60,000 rupees per month. This means that he would be giving up the additional 1,60,000 rupees that he could have earned by staying in his current job.
6. Considerations:
- When evaluating whether to accept the new job offer, Harish should consider not only the immediate financial impact but also factors such as job satisfaction, career growth opportunities, and work-life balance.
7. Conclusion:
- The opportunity cost for Harish if he accepts the job offer for 8,40,000 rupees per month is 1,60,000 rupees per month. It is important for him to weigh the pros and cons of both options before making a decision.