Your aunt announces that she is thinking about opening a restaurant. She estimates that it would cost €500,000 per year to rent the premises, buy a licence to serve alcohol and to buy in food. In addition, she would have to leave her €50,000 per year job as an accountant.

a. Define opportunity cost.

b. What is your aunt’s opportunity cost of running the restaurant for a year? If your aunt thought she could sell €510,000 worth of food in a year, should she open the restaurant? Explain.