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Chapter 2

Q. 2.4

An importer rents a building for storage. The rental cost is $2,000 per month. Presently, the importer occupies only half of the building space. She could sublet the remaining space for $600 per month. She is considering a new line of products to import that would use the remaining space. What is the opportunity cost of using the building to add the new line of products?


Verified Solution

The opportunity cost is the forgone opportunity to sublet the remaining space, or $600 per month.