Final answer:
A landlord would prefer offering lease incentives and a higher base rent of both options are the same because it allows them to attract tenants with incentives while maximizing their rental income through the higher base rent.
Step-by-step explanation:
In order to explain why a landlord would prefer offering lease incentives and a higher base rent of both options is the same, we need to understand the concept of opportunity cost in economics. Opportunity cost refers to the alternative option or benefit that is forgone when choosing one option over another. When landlords offer lease incentives, such as discounted rent or waived fees, they are essentially reducing the price of the housing for the tenant. However, this means that they are sacrificing potential higher rental income. On the other hand, by increasing the base rent, landlords can maximize their rental income without offering any incentives.
For example, let's say a landlord has an apartment they could rent out for $1,000 per month. They have two options: offer a lease incentive such as a $100 discount on rent or increase the base rent to $1,100 per month. If they choose to offer the incentive, the tenant pays $900 per month, and the landlord loses out on $100 of potential rental income. But if they choose to increase the base rent, the tenant pays $1,100 per month, and the landlord doesn't have to give any discounts or incentives.
Therefore, by offering lease incentives and a higher base rent, landlords can attract tenants with the incentives while still maximizing their rental income through the higher base rent. This strategy allows them to balance the needs of the tenant and their own financial interests.