Opportunity cost vs. Fixed cost and Variable cost

Hello All,

I am curious – in a real world, we do calculations using fixed cost and the variable cost. However, in microeconomic analysis, we always calculate the economic profit. I am curious where does the opportunity cost of being in the business go – is it fixed cost or variable cost? Example, I set up a business, when I could earn $60K from a job in corporation. Where will this $60K be reflected?

Also, fixed cost + variable cost = explicit cost + implicit cost = TC. What component of fixed cost or variable cost is the implicit cost?

Any thoughts will be greatly appreciated.

Opportunity cost can be either fixed or variable theoretically. But it seems to mostly be of the fixed variety. I could see a variable opportunity cost if you’re consuming a resource that has an alternate use per unit. But it’s late and I have to set off fireworks for the kids, so I’ll give it some thought.