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Opportunity cost

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Question 3

A manufacturing firm has a vacant warehouse and is considering three mutually exclusive options for its use:

  • Option X: Rent the space to a logistics company for £140,000 per year.
  • Option Y: Use the space to launch a new product line, expected to yield £185,000 in net annual returns.
  • Option Z: Convert the space into an employee training center, valued at £110,000 in annual productivity gains.

If the firm decides to proceed with Option Y, the opportunity cost of this decision is:

£110,000

£140,000

£250,000

£45,000

Opportunity cost Questions

  1. A Level
  2. /Economics
  3. /Opportunity cost