An unemployed salesperson has been offered a job paying Rs500 a week. He turns that job down and continues to search for another job that pays more. The cost of this continued search is ?
Correct answer: B. The Rs500 weekly salary that he has forgone and the monetary costs incurred by continuing to search
- A. the Rs500 weekly salary that he has forgone to search for another job
- B. The Rs500 weekly salary that he has forgone and the monetary costs incurred by continuing to search
- C. Rs difference between the weekly salary he finally accepts and the Rs500 weekly salary that he has forgone
- D. Rs0, since he is currently unemployed
Explanation
The opportunity cost of continuing the search includes the Rs500 weekly wage forgone plus any monetary expenses of searching. Thus, rejecting the available job has a real cost even though the worker remains unemployed.
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