St. Charles Hospital, located in an upper-income neighborhood of a large city, r

Question

St. Charles Hospital, located in an upper-income neighborhood of a large city, recently received a restored mansion as a gift from an appreciative patient. The board of directors decided to remodel the mansion and use it as recuperative quarters for patients willing to pay a premium for luxurious accommodations. The cost to the hospital of using the mansion includes
a. nothing because it was a gift.
b. how much the hospital pays for upkeep--taxes, insurance, utilities, maintenance, etc.
c. how much the hospital would receive if it rented or sold the mansion.
d. both b and c

is it B?

Explanation / Answer

I would say D. From an economic perspective, you have to consider accounting costs (stuff like (B)) and economic costs (stuff like (C)). Both factor into overall costs.

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