Steven lives in a big city where there is a shortage of parking.He has a parking spot in his driveway where he parks his car.Which of the following statement is most correct?
A)Steven has a lower opportunity cost of owning a car than his neighbor,who must rent a parking spot.
B)The opportunity cost of using the parking spot is zero,because Steven owns the house.
C)The opportunity cost of using the parking spot is the price he could charge someone else for using the spot.
D)The opportunity cost depends on how much Steven's mortgage payment is.

Question

Quizplus · Accepted Answer

The opportunity cost of using the parking spot is the price Steven could charge someone else for using the spot. In a city where parking is scarce, there is always a demand for parking spaces, and Steven could potentially earn rent by leasing out his parking spot. Therefore, the opportunity cost of using the parking spot is the potential income he could have earned by renting it out.

Steven Lives in a Big City Where There Is a Shortage