Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour.

-Refer to the scenario above.What is the marginal rent cost if the firm chooses factory Very Close over factory Close?
A) −$100
B) −$200
C) $100
D) $200

Question

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour.
 
-Refer to the scenario above.What is the marginal rent cost if the firm chooses factory Very Close over factory Close?
A) −$100 
B) −$200 
C) $100 
D) $200

Quizplus · Accepted Answer

The marginal rent cost is the additional cost incurred when choosing factory Very Close over factory Close, which is $200.

Scenario: a Firm Wants to Set Up a Factory