Knowledge Check

Eva pays $$3,000$ per month to rent her house. She has a garage but is considering turning the space into a hair styling studio. She expects to earn $$3,000$ a month from this new business. Instead, she could sublease the garage space to a neighbor for $$800$ per month. As part of the terms of sublease, her neighbor will pay an additional $$100$ per month for utilities. All other costs are unaffected. Eva is now analyzing the costs and benefits of these alternatives.

Help Eva in her analysis by identifying the following items as either a relevant cost or irrelevant cost in the decision.