A homeowner will be away from her house for six months. The monthly mortgage payment on the house is $1,000. The owner's cost of utilities is $100 if the house is unoccupied but $300 if the owner rents it out. If the owner wishes to minimize her losses from the house while away, she should rent the house for as much as the market will bear, as long as monthly rent is greater than which of the following? (Assume wear and tear to be zero regardless of whether the house is occupied.)

Question

Quizplus · Accepted Answer

The owner's cost of utilities is $100 if the house is unoccupied but $300 if the owner rents it out. So, the owner's loss is $200 per month if the house is unoccupied. If the owner rents the house for $200 or more per month, the owner's loss will be less than $200 per month.

A Homeowner Will Be Away from Her House for Six