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 statements 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 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 he could charge someone else for using the spot. This is because if Steven chose not to park his car there, he could potentially rent out the space and receive income. Therefore, the cost of using the parking spot is the foregone rental income.

Steven Lives in a Big City Where There Is a Shortage