Devlin is a computer programmer who earned $30,000 in 2011. But on January 1, 2012 he opened a custom woodworking business. Question Facts 1. Devlin stopped renting out his cottage for $6,500 a At the end of 2012, Devlin submitted the information on the right to his year and used it as his woodworking shop. accountant. The market value of the cottage increased from Use the question facts to calculate Devlin's opportunity cost of production and economic profit. 2. $78,000 to $79,000. He spent $20,000 on materials, phone, utilities, etc. 3. 4. He leased machines for $8,000 a year. 5. He paid $7,500 in wages. He used $15,000 from his savings account, which earns 2 percent a year interest. 6. Devlin's opportunity cost of production is O A. $100,300 7. He borrowed $50,000 at 8 percent a year from the bank O B. $85,500 He sold $120,000 worth of furniture. 8. OC. $39,500 9. Normal profit is $25,000 a year. O D. $60,800
Devlin is a computer programmer who earned $30,000 in 2011. But on January 1, 2012 he opened a custom woodworking business. Question Facts 1. Devlin stopped renting out his cottage for $6,500 a At the end of 2012, Devlin submitted the information on the right to his year and used it as his woodworking shop. accountant. The market value of the cottage increased from Use the question facts to calculate Devlin's opportunity cost of production and economic profit. 2. $78,000 to $79,000. He spent $20,000 on materials, phone, utilities, etc. 3. 4. He leased machines for $8,000 a year. 5. He paid $7,500 in wages. He used $15,000 from his savings account, which earns 2 percent a year interest. 6. Devlin's opportunity cost of production is O A. $100,300 7. He borrowed $50,000 at 8 percent a year from the bank O B. $85,500 He sold $120,000 worth of furniture. 8. OC. $39,500 9. Normal profit is $25,000 a year. O D. $60,800
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.6IP
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