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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