The opportunity cost of owning and using a firm's capital is defined as the capital's
A) variable cost.
B) fixed cost.
C) economic depreciation.
D) nonpayment depreciation.
E) explicit cost.

Question

Quizplus · Accepted Answer

The opportunity cost of owning and using a firm's capital is the income that the capital could have generated if it was used in an alternate investment. This income foregone is known as economic depreciation, which is the reduction in the value of the capital over time due to obsolescence, wear and tear, and other factors.

The Opportunity Cost of Owning and Using a Firm's Capital