Suppose that you own a house. What is the opportunity cost of living in the house?
A) There is no opportunity cost because you own the house.
B) There is no opportunity cost unless you could set up a business in the house.
C) The opportunity cost is the rent you could have received from a tenant if you didn't live there.
D) The opportunity cost is the cost of your monthly mortgage payment plus bills.

Question

Quizplus · Accepted Answer

The opportunity cost of living in the house is the potential income you could have earned if you rented it out. This is represented by the rent that could have been earned from a tenant. Option A is incorrect because there is always an opportunity cost regardless of whether you own the house or not. Option B is incorrect because the opportunity cost is not limited to a business opportunity. Option D mentions the cost of the mortgage payment and bills, but this is not the same as the opportunity cost.

Suppose That You Own a House