A Nike women's-only store in California offers women's running, training, and sportswear products and also contains an in-store fitness studio for group and personal fitness training sessions. The store consistently earns profits in excess of $442,000 per year and is located on prime real estate in the center of town. The store owner pays $15,000 per month in rent for the building. A real estate agent approached the owner and informed her that she could add $7,400 per month to her firm's profits by renting out the portion of her store that she uses as a fitness studio. While the prospect of acquiring this rental income was enticing, the owner believed the use of that space as a fitness studio was an important contributor to her store's profits. What is the opportunity cost of continuing to operate the fitness studio within the store? $
Answer:
opportunity cost: it is the cost of choice which we forgo in order to choose one alternate over other.
Here the opportunity cost of continuing to operate the fitness studio within the store is $7,400
as she has choose to continue to operate the fitness studio within the store instead of the real estate agent's approach.
A Nike women's-only store in California offers women's running, training, and sportswear products and also contains...
A Nike women's-only store in California offers women's running, training, and sportswear products and also contains an in-store fitness studio for group and personal fitness training sessions. The store consistently earns profits in excess of $458,000 per year and is located on prime real estate in the center of town. The store owner pays $14,000 per month in rent for the building. A real estate agent approached the owner and informed her that she could add $7,900 per month to...