You own a food truck, and you've been operating in the parking lot of your friend's business. You pay your friend $900 per month to park at their business, and your food truck revenue is $6,000 per month. You're considering whether you should continue to park in your friend's lot or move to another location. Your revenue in the new location would be $10,500 per month, but you'd have to pay $1,500 per month to park there. You would also have to buy more fresh ingredients to meet the increased sales, so your monthly operating costs would increase by $600. If you choose to keep parking in your friend's lot, are you correctly applying the cost-benefit principle?
Yes, because you are maximizing your economic surplus by parking in your friend's lot.
Yes, because moving to the new location would decrease your economic surplus.
No, because your economic surplus varies depending on how you frame your costs.
No, because you could increase your economic surplus by moving to the new location.
