Your firm owns an old truck that is used to make local deliveries. The truck is fully depreciated and only costs $1.20 per hour to operate, but you could rent it to another firm for $15.00 per hour. What is the opportunity cost of operating this truck in your business?
A) $1.20 per hour
B) $15.00 per hour
C) $16.20 per hour
D) Less than $1.20 per hour

Question

Quizplus · Accepted Answer

The opportunity cost of operating the truck in your business is the amount you could earn by renting it out to another firm, which is $15.00 per hour. Choosing to use it for your own deliveries means giving up this potential income.

Your Firm Owns an Old Truck That Is Used to Make