A Las Vegas hotel is considering disposing of a row of vending machines as it would like to place an internet cafe in the space occupied by the vending machines. The vending machines have been generating $18,000 in profit for the hotel. When making this decision, the $18,000 annual profit generated by the vending machines can be viewed as:

Question

Quizplus · Accepted Answer

The $18,000 annual profit generated by the vending machines represents an opportunity cost, as it is the potential income that the hotel could earn by keeping the vending machines instead of replacing them with an internet cafe. It is important to consider this opportunity cost when making decisions about how to allocate resources.

A Las Vegas Hotel Is Considering Disposing of a Row