Suppose Gladys Smith operates her pizza restaurant in a building she owns in

Chicago. Similar buildings in the neighborhood rent for $$4000$ per month. Gladys is considering selling

her building and renting space in the suburbs for $$3000$ per month. Gladys decides not to make the

move. She reasons, $$I would like to have a restaurant in the suburbs, but I pay no rent for my

restaurant now, and I don$$t want to see my costs rise by $$3000$ per month.$$ What do you think of

Gladys$$s reasoning? Chose the best answer:

A$)$ Gladys$$s reasoning is correct. Why move and have to start writing a check for $$3000$ rent when

she doesn$$t pay rent right now on the building she owns in the city?

B$)$ Gladys$$s reasoning is faulty. There is an opportunity cost associated with building she owns. It is

mentioned she could likely rent out her building in the city for $$4000,$ which would more than

cover her $$3000$ rent in the suburbs. Opportunity costs of $$self$-$employed$$ resources, whether

Gladys$$s labor and time, or an asset she owns, like the building, should always be considered

when making decisions!