In southern Ontario,the demand for real estate has been increasing rapidly for years.Therefore,the _____ cost of capital is _____ in southern Ontario's peach groves.

Question

Quizplus · Accepted Answer

The phrase "demand for real estate has been increasing rapidly" suggests that there is a high demand for land in southern Ontario, which in turn implies that the implicit cost of capital (i.e., the opportunity cost of using money to purchase real estate instead of investing it elsewhere) is increasing in the region's peach groves. Therefore, choice B - implicit cost of capital is increasing - is the best answer.

In Southern Ontario,the Demand for Real Estate Has Been Increasing