Question

If you own a condo and you decide to lease it to your cousin,

A. there is not an opportunity cost of leasing the condo because you own it.
B. there is an opportunity cost of leasing the condo because you could have chosen to live in it.
C. there is an opportunity cost of leasing the condo because you have already made payments on it.
D. there is not an opportunity cost of leasing the condo because you collect rent from your cousin.

Answer 1

The opportunity cost of leasing the condo is that you are giving up the opportunity to live in it yourself.

Step-by-step explanation:

The correct answer is B. There is an opportunity cost of leasing the condo because you could have chosen to live in it.

Opportunity cost refers to the value of the next best alternative that is foregone when a choice is made. In this case, if you decide to lease your condo to your cousin, you are giving up the opportunity to live in it yourself. By choosing to lease it, you are forgoing the benefits and comforts of living in your own condo.