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 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?
$________
$7,900
Opportunity cost of the fitness studio is the rent given up by continuing to operate the fitness studio. It equals $7,900 a month.
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 $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...