A Las Vegas hotel is considering disposing of a drinks vending machine as it would like to place a hotel phone in the space occupied by the vending machine. The vending machine has been generating $6,500 in profit for the hotel. When making this decision, the $6,500 annual profit generated by the vending machine can be viewed as:

Question

Quizplus · Accepted Answer

The $6,500 annual profit generated by the vending machine is an opportunity cost because it represents the potential revenue that could be earned if the hotel decided not to dispose of the machine and continue generating profits from it.

A Las Vegas Hotel Is Considering Disposing of a Drinks