If you own a building and you decide to use that building to open a restaurant,

A) there are no sunk costs involved in this decision.
B) there is no opportunity cost of using this building for a restaurant because you own it.
C) the only cost relevant to this decision is the price you paid for the building.
D) there is an opportunity cost of using this building for a restaurant because it could have been used in other ways.

Question

Trent Kniese · Accepted Answer

Final Answer : D, Explanation :  Choosing to use the building for a restaurant involves an opportunity cost because the building could have been used for other purposes, such as renting it out or using it for a different type of business. Sunk costs are irrelevant to this decision because they are costs that have already been incurred and cannot be recovered. The price paid for the building is also irrelevant because it is a historical cost and does not reflect the current value or potential uses of the building.

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