10 months ago, a firm had leased a downtown office for $5,000 per month. The lease runs for the next 2.5 years. The current office space of similar size rents at
$4,000 per month. If the firm uses the space exclusively for a project over the next 6 months, the opportunity cost related to this equals ________.
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A. B. C. D.C
Opportunity cost is based on current market cost. It does not matter what the firm originally paid or agreed to pay for the property in question. Of course, since taxes are based on actual costs, the afte rtax opportunity cost is definitely affected by historical contracts currently in force.