Question

A business buys a building to use for storage. The monthly opportunity cost of the building is best measured as

O the rental income the business could earn if it rented out the building to another business.
O the price the business paid for the building divided by twelve.
O the utility bills that must be paid for the building each month.
O the monthly mortgage payment the business must pay

Answer 1

The monthly opportunity cost of the building a business uses for storage is the rental income it could have earned if rented out to another business.

Step-by-step explanation:

The question revolves around the concept of opportunity cost in a business context. Opportunity cost refers to the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Consequently, when a business buys a building to use for storage, the monthly opportunity cost of the building is best measured as the rental income the business could earn if it rented out the building to another business. This is because that rental income represents the foregone profit that the business could have realized had it chosen to use the building in a different way.