The decision whether to buy or rent should involve consideration of which of the following factors?

• A. Opportunity cost, future price expectations, and personal preferences
• B. Only the current market price of the good
• C. The color of the product being purchased or rented
• D. Government regulations unrelated to housing

Answer: (A)

Verified step by step guidance

1. Understand that the decision to buy or rent involves comparing the costs and benefits associated with each option, not just the immediate price.
2. Identify the relevant economic factors: opportunity cost (what you give up by choosing one option over another), future price expectations (how prices might change over time), and personal preferences (individual needs and circumstances).
3. Recognize that only considering the current market price ignores important dynamic factors like potential price changes and alternative uses of money.
4. Exclude irrelevant factors such as the color of the product or unrelated government regulations, as they do not affect the economic decision between buying and renting.
5. Conclude that the correct approach is to weigh opportunity cost, future price expectations, and personal preferences when deciding whether to buy or rent.