Jayanthi moves her yoga studio from her home to a space she rents in Woodstock, Ontario.Holding everything else constant, as a result of this move,

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By moving her yoga studio to a rented space in Woodstock, Ontario, Jayanthi is now incurring an explicit cost, which is the cost of renting the space. This cost was not incurred when she was running the studio from her home. Therefore, her explicit cost rises. On the other hand, her implicit cost falls as she no longer has to forgo the rent she could have earned by using the space in her home for other purposes. However, since her explicit cost rises more than her implicit cost falls, her economic cost increases. This means that her opportunity cost, which is the cost of the alternative foregone, also increases. Therefore, the best choice is B - her implicit cost falls and her explicit cost rises.

Jayanthi Moves Her Yoga Studio from Her Home to a Space