A vice president of a manufacturing company said: "We own five acres of land next to our own plant. It won't cost us a thing to use that land for our new expansion wing." That vice president does not fully understand the concept of:

Question

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The vice president does not seem to be considering the opportunity cost of using the five acres of land for the new expansion wing instead of using it for another potentially profitable purpose. The fact that it "won't cost us a thing" is irrelevant when there could be a missed opportunity to generate additional value from using the land for something else.

A Vice President of a Manufacturing Company Said: "We Own