Sanford wants to start up his own business, and needs $50,000 to get it off the ground. He can either withdraw it from his savings account, where he currently earns 2 percent, or he can take out a loan for $50,000 and pay 2 percent interest. Sanford should compare:

A. the explicit cost of $1,000 to the implicit cost of $1,000 and realize it will cost the same whether he borrows it or uses his savings for the venture.
B. the implicit cost of $51,000 to the explicit cost of $1,000 and choose to borrow the money.
C. the explicit cost of $1,000 to the implicit cost of $51,000 and choose to borrow the money.
D. the implicit cost of $1,000 to the explicit cost of $51,000 and choose to use his savings.


Answer: A

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