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

Question

Quizplus · Accepted Answer

The explicit cost will rise as Jayanthi will have to pay rent for the space she rents in Oakland, California. However, her implicit cost will fall because she no longer has to allocate space and utilities for her yoga studio in her home, which is an opportunity cost she previously incurred. Therefore, her economic cost will be the sum of her explicit and implicit costs, which will increase. Hence, option B is the correct answer.

Jayanthi Moves Her Yoga Studio from Her Home to a Space