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The World of the Videos operates the retail store which rents movie videos. For each of the last 10 years, World of Videos has constantly earned profits exceeding the $30,000 per year. The store is situated on prime real estate in the college town. World of Videos pays $2,400 per month in rent for its building, however it employs only 50 percent of square footage rented for video rental purposes. The other portion of rented space is fundamentally vacant. Noticing that World of Videos only occupies a portion of building, a real estate agent told the owner of the World of Videos that she could add $1,500 per month to her firm’s profits by renting out unused portion of store. While the prospect of adding the additional $1,500 to World of Video’s bottom line was enticing, the owner was as well contemplating using the added space to rent video games. What is the opportunity cost of using the unemployed portion of building for video game rentals?

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Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M914029

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