Suppose that you own a house.What is the opportunity cost of living in the house?
A) There is no opportunity cost because you own the house.
B) There is no opportunity cost unless you could set up a business in the house.
C) The opportunity cost is the rent you could have received from a tenant if you did not live there.
D) The opportunity cost is the cost of your monthly mortgage payment plus bills.

Question

Quizplus · Accepted Answer

The opportunity cost of living in the house is the rent you could have received from a tenant if you did not live there. This is because by living in the house, you are giving up the opportunity to rent it out and receive income from it. Options A and B are incorrect as there is always an opportunity cost to consider, even if you own the asset. Option D is not entirely incorrect as the cost of the mortgage payment and bills are a factor to consider, but they do not fully encompass the opportunity cost of living in the house.

Suppose That You Own a House