A firm uses its own building, which it could rent out for ₹30,000 a month, instead of renting it. In deciding whether the business pays, this ₹30,000 is

not a cost, because no money is paidCorrect answerYour answeran opportunity cost that should be countedCorrect answerYour answera tax to the governmentCorrect answerYour answerthe firm's profitCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

By using the building, the firm gives up the rent it could have earned.
That forgone rent is a real cost of the choice even though no cash changes hands.

Concept: Implicit cost as opportunity cost
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsOpportunity cost and MRT

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A firm uses its own building, which it could rent out for ₹30,000 a month, instead of renting it. In deciding whether the business pays, this ₹30,000 is

Explanation