Opportunity Cost: Work from Home

Question:

A company can choose to arrange its employers to work at office or work from home. Explain whether the opportunity cost of arranging employees to work at office will necessarily remain unchanged to the company.

a) The office rents fall. (3 marks)

b) The chance of employees staying away from work is increasing in the home. (3 marks)

Answer:

(a)

Yes (1)

The chosen option, working at office, involves less money resource forgone, resulting in a rise in its net value.  (1)

The highest valued option forgone, working from home, does not change.  (1)

(b)

No (1)

The highest valued option forgone, working from home, involves more non-money resources to monitor the employees, resulting in a fall in its net value. (1)

The opportunity cost falls. (1)