Video world operates a retail store that rents movie videos

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Video world operates a retail store that rents movie videos. for each of the last 10 years, Video World has consistently earned profits exceeding P250000 per month in rent for its building, but it uses only 50 percent of the square footage rented for video rental purposes. The other option of the rented space is essentially vacant.

Noticing that Video World only occupies a portion of the building, a real estate agent told the owner of Video World that she could add P12000 per month to her firm's profits by renting out the unused portion of the store. While the prospect of adding an additional P12000 to Video World's bottom line was enticing, the owner was also contemplating using the additional space to rent video games. What is the opportunity cost of using the unused portion of the building for video game rentals?

Reference no: EM13571534

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