Question 08: Suppose Jill Johnson operates her pizza restaurant in a building sheowns in the center of the city. Similar buildings in the neighborhood rent for $4000per month. Jill is considering selling her building and renting space in the suburbs for$3000 per month. Jill decides not to make the move. She reasons, "I would like tohave a restaurant in the suburbs, but I pay no rent for my restaurant now, and I don'twant to see my costs rise by $3000 per month." What do you think of Jill'sreasoning? Chose the best answer:A)Jill's reasoning is correct. Why move and have to start writing a check for$3000 rent when she doesn't pay rent right now on the building she owns inthe city?B)Jill's reasoning is faulty. There is an opportunity cost associated with buildingshe owns. It is mentioned she could likely rent out her building in the city for$4000, which would more than cover her $3000 rent in the suburbs.Opportunity costs of "self-employed" resources, whether Jill's labor and time,or an asset she owns, like the building, should always be considered whenmaking decisions

Opportunity cost is the forgone benefits from the next best alternative.

Question 08: Suppose Jill Johnson operates her pizza restaurant in a building she owns in the center of the city. Similar buildings in the neighborhood rent for $4000 per month. Jill is considering selling her building and renting space in the suburbs for $3000 per month. Jill decides not to make the move. She reasons, "I would like to have a restaurant in the suburbs, but I pay no rent for my restaurant now, and I don't want to see my costs rise by $3000 per month." What do you think of Jill's reasoning? Chose the best answer: OA) OB) Jill's reasoning is correct. Why move and have to start writing a check for $3000 rent when she doesn't pay rent right now on the building she owns in the city? Jill's reasoning is faulty. There is an opportunity cost associated with building she owns. It is mentioned she could likely rent out her building in the city for $4000, which would more than cover her $3000 rent in the suburbs.. Opportunity costs of "self-employed" resources, whether Jill's labor and time, or an asset she owns, like the building, should always be considered when making decisions

Question 08: Suppose Jill Johnson operates her pizza restaurant in a building she owns in the center of the city. Similar buildings in the neighborhood rent for $4000 per month. Jill is considering selling her building and renting space in the suburbs for $3000 per month. Jill decides not to make the move. She reasons, "I would like to have a restaurant in the suburbs, but I pay no rent for my restaurant now, and I don't want to see my costs rise by $3000 per month." What do you think of Jill's reasoning? Chose the best answer: OA) OB) Jill's reasoning is correct. Why move and have to start writing a check for $3000 rent when she doesn't pay rent right now on the building she owns in the city? Jill's reasoning is faulty. There is an opportunity cost associated with building she owns. It is mentioned she could likely rent out her building in the city for $4000, which would more than cover her $3000 rent in the suburbs.. Opportunity costs of "self-employed" resources, whether Jill's labor and time, or an asset she owns, like the building, should always be considered when making decisions

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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