16 Explain how a person's decision to start their own business has an opportunity cost.

[Sir Afzal Shad]

16 Explain how a person's decision to start their own business has an opportunity cost.
Hint: KN: The next best alternative is lost > APP: Starting a business instead of working a paid job > AN: The lost salary is the opportunity cost.

Possible Structure - 3 Marker
[KN] >> [APP] >> [AN]

[Hajra]

[KN] Opportunity cost is the next best alternative given up when a choice is made. [AP] If a person decides to start their own business, they may give up working in a stable job. [AP] The opportunity cost could be the salary and job security they sacrifice. They risk earning less at the beginning, they lose benefits like paid holidays, and they give up free time since starting a business often requires long hours. In the long run, this choice could also affect their lifestyle if the business struggles.

Examiner Comments:
> [1/3] If we assume salary as the KN, otherwise its [0/3]
> KN should not be a definition but "reason" for example "Stable Salary"
> Paid Holidays is not the valid point since its not happening each time with job.
> Working for long hours is another KN

[hassanalizafar]

[KN]A person decision to start their own business has an opportunity cost because the next best alternative is lost.
[APP]For instance,if they choose to open a bakery instead of working in a company for a paid job, they give up the steady income from employment.
[AN] Losing that income causes financial insecurity which would lead to greater difficulty in paying personal expenses hence creates higher stress levels and may affect decision-making for the business.

Examiner Comment:
> We don't need to give Def in KN; "Steady Income from Salary"
> APP is Good
> AN is 2/3

[Areeba Arshad]

[KN] Opportunity cost is the next best alternative that is given up when making a decision.
[APP] For example, if a person decides to start their own business, they give up the option of working in a paid job where they would earn a stable salary.
[AN] This affects them because:
1.) They lose the guaranteed income they could have earned from the job.
2.) Their financial security becomes uncertain since the business may take time to become profitable.
3.) In the long run, if the business fails, they might regret not choosing the safer option of regular employment.

[Dania Farooq]

KNOpportunity cost is the value of the next best alternative that is given up when a choice is made.
APP: For example, if a person decides to start their own business instead of working a paid job, they give up the income they would have earned from that job.
AN This lost salary is the opportunity cost of starting the business, as it represents the money they sacrifice by not choosing the paid job.there might be other costs like lost job security or benefits, which also factor into the overall opportunity cost of becoming an entrepreneur.

[Shaliza khawaja]

(KN)Opportunity cost for a person starting a business could be a job
(APP) for example other then opening a bakery, you could get a job at a bakery
(AN) this would less stressfull then managing a whole bakery, you would have a secure salary and also have a work life balance.

[areeshasaber]

[kn] Opportunity cost is what is sacrificed when a choice is made.
[app] If a person starts their own business, they may lose the free time they would have had by working normal hours in a paid job.
[an+] Over here, the lost opportunity cost is lost salary growth, lost networking opportunities and lost training.

Examiner Comments:
> [1/3] If we assume "Paid Job" as KN, otherwise its [0/3]
> KN should not be the DEF rather the reason.
> The reason can be "Paid Job"
> lost networking opportunities and lost training are relevant KN but not the AN.

[Arham Qadri]

[KN] Opportunity cost is the benefit of the next best alternative that is given up when a choice is made.
[APP] For example, if someone decides to start their own business, they may give up the salary and job security they would have earned by working for an employer.
[AN] The decision to start a business means the person sacrifices the stable income and benefits of employment. Hey also give up the time and energy that could have been spent on other activities, such as further education or leisure. If the business fails, the opportunity cost becomes even greater, as they may have lost savings or investments that could have been used elsewhere.




[UPDATED] (better??)

[Abdur Rehman khan]

[KN] Starting a business means that the person gives up the next best alternative of earning from a job.
[APP] For example, instead of becoming an employee with a fixed salary, they choose to run their own business.
[AN] This means the opportunity cost is the lost salary and job security that they have sacrificed creating a financial risk.

[Aarib Saad]

(KN)The opportunity cost will be lost job security.
(APP)For instance, if a person has $80000 which he/she can spend on going to university for degree, but instead that person starts a business, this in turn will make it so the person will no longer be able to get a job for a stable income.
(AN)This will increase mental load on that person as he/she will need to earn a profit for survival, so they will spend more time with business, leading to poorer work-life balance, thus worsening their living standards.

[M huzaifa jillani]

(KN)
Opportunity cost is the next best thing you give up when making a choice.
(APP)
If a person starts their own business , they give up working at another job .
(AN)
So, the Opportunity cost could be the salary and job security they would have earned if they stayed employed.

[Abdullah Mohsin]

[KN] Starting a business has an opportunity cost because the owner must give up their next best alternative.
[APP] For example, by opening a bakery, the owner may give up the stable salary and benefits from paid employment, the interest or returns they could have earned if their savings were invested elsewhere, and their personal leisure time that now goes into running the business.
[AN] Furthermore, the owner would have to spend more time in the business in order to earn profits, leading to poor work-life balance and a fall in their living standards

[shamaim shakeel]

Opportunity cost is the benefit of the next best alternative that is given up when making a choice (KN). For example, if a person starts their own business, they may give up working in a paid job for a company (APP). The salary they would have earned in that job is the opportunity cost of choosing to run their own business (AN).

[Abdullah Altaf]

[KN] Opportunity cost is next best alternative given up in choosing another item.
[APP] Since the person have decided to start the business, he could have decided to get a job hence the salary paid is opportunity cost.
[AN] The person risks losing potential income, job security, and benefits they would have had in a regular job.

[amaimatif]

Starting a business has an opportunity cost because the next best alternative is given up. For example, a person may choose to launch a business instead of taking a stable paid job. The salary they would have earned becomes the opportunity cost.