Zoe's grandparents are excited about finally paying off their mortgage because,as they say,"Our cost of housing is now zero." Zoe should explain to them the economic concept of:

A) marginal analysis: if the additional cost of housing is zero,then their additional benefit is also zero.
B) opportunity cost: by living in the house,they are giving up the opportunity to sell the house,buy a smaller one,and pocket the difference.
C) efficiency: If their cost of housing is now zero,they should let Zoe move in without charging her any rent.Zoe is better off,and her grandparents aren't hurt.
D) equity: it is unfair that some people are still paying off their mortgage.

Question

Louis Covino · Accepted Answer

Final Answer : B, Explanation :  The economic concept being referred to in this situation is opportunity cost. Zoe's grandparents may no longer have a mortgage payment, but they are still giving up the opportunity to sell their house and use the proceeds for other things. By staying in their house, they are choosing to forego the benefits of selling it and downsizing to a smaller, less expensive home.

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