Blake decides to spend a spring day in the field planting wheat with some help from some workers he hires. Blake earns total revenue of $870. Blake incurs the following costs: $50 for renting a tractor, $150 for fertilizer, and $100 for wages paid to workers. Blake used $5000 that he could have invested in his savings account at 10 percent interest to organize his spring day planting wheat. In addition, Blake gave up $130 he could have earned at his other job in deciding to plant wheat. 1. What is Blake’s accounting profit? 2. What is the total opportunity cost Blake incurred for his spring day in the field planting wheat? 3. What is Blake’s economic profit?
Blake decides to spend a spring day in the field planting wheat with some help from some workers he hires. Blake earns total revenue of $870. Blake incurs the following costs: $50 for renting a tractor, $150 for fertilizer, and $100 for wages paid to workers. Blake used $5000 that he could have invested in his savings account at 10 percent interest to organize his spring day planting wheat. In addition, Blake gave up $130 he could have earned at his other job in deciding to plant wheat. 1. What is Blake’s accounting profit? 2. What is the total opportunity cost Blake incurred for his spring day in the field planting wheat? 3. What is Blake’s economic profit?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Blake decides to spend a spring day in the field
planting wheat with some help from some
workers he hires. Blake earns total revenue of
$870. Blake incurs the following costs: $50 for
renting a tractor, $150 for fertilizer, and $100 for
wages paid to workers. Blake used $5000 that he
could have invested in his savings account at 10
percent interest to organize his spring day
planting wheat. In addition, Blake gave up $130
he could have earned at his other job in
deciding to plant wheat.
1. What is Blake’s accounting profit?
2. What is the total opportunity cost Blake incurred for his spring day in the field planting wheat?
3. What is Blake’s economic profit?
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