Marginal Analysis of Homeownership All economic decisions involve either-or decisions or how much decisions. Homeownership is clearly an either-or decision and involves in depth analysis of many aspects like explicit costs, implicit costs, capital, marginal costs, and marginal benefits. Realtor Magazine explains that five critical factors to consider when purchasing a home are price, taxes, the surrounding area, local ordinances, and economic development. These factors often do not have a price tag, but add or subtract from other values gained from a particular home. The method that leads to the best economic outcome is the principal of either-or decision-making. This principal states when making an either-or choice between two activities, choose the one with the positive economic profit. Accounting profit is equal to revenue minus the explicit cost, but economic profit is revenue minus the opportunity cost of the resources that were used. Obviously the price of a house is very important and is great example of an explicit cost. All explicit costs require an outlay of money. Other examples of explicit costs of homeownership are taxes and utilities. Homeownership also has implicit costs which do not require money. Economists measure implicit costs to determine something's economic benefit. One example of implicit cost is giving up the benefit of others doing maintenance or landscaping. Another example is homeowners also forgo the ability to move to other locations with ease. Homeownership also has sunk costs, which have already been paid for but cannot be recovered. One sunk cost all homeowners face is interest. According to Realtor Magazine, the first five years of payments generally go towards paying interest on a house. Sunk costs should not be considered when planning for the future. One must always weigh the concept of marginal cost versus marginal