Joe runs a landscape company and uses one of his home's bedrooms as a home office. This office could be used to earn rental income from college students. If average rental income in Joe's neighborhood were to rise:

Question

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If the average rental income in Joe's neighborhood were to rise, the opportunity cost of using his bedroom as a home office would increase. This is because the potential rental income he could earn from college students would be higher, making it more costly to use the space for his own business. Therefore, he may want to consider reducing his home office space or finding a different location for his business. Option A is incorrect because an increase in rental income would result in a higher opportunity cost. Option B is incorrect because there is no reason to believe that an increase in rental income would affect demand for landscaping services. Option C is also incorrect because it assumes that Joe should expand his office space based on the information given.

Joe Runs a Landscape Company and Uses One of His