If a firm buys a building so as to have office space for its workers, the monthly opportunity cost of the building is best measured as

A. the rent the firm could earn if it rented the building to another firm

Explanation:

O A. the rent the firm could earn if it rented the building to another firm O B. the price the firm paid divided by twelve O C. the monthly mortgage payment the firm must pay O D. zero. Click to select your ans e here to search

There are two types of costs

1. Implicit cost or opportunity cost : Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives. It is used in calculating economic profit

By using the office space for workers, the firm is forgoing the opportunity to rent out the space to another firm. The rent the firm could have earned is the opportunity cost

2. Explicit cost : It includes the amount expended in running the business. It is used in calculating accounting profit

They are : the monthly mortgage payment the firm

total amount expended in building

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