Joe, who has no skills, no job experience, and no alternative job, runs a shoeshine stand. Other shoeshine operators earn $10,000 a year. Joe pays rent of $2,000 a year, and his total revenue is $15,000 a year. Joe spent $1,000 on equipment and used his credit card to buy it. The interest on a credit card balance is 20 percent a year. At the end of the year, Joe was offered $500 for his business and its equipment. Calculate Joe’s opportunity cost of production and economic profit.
Joe, who has no skills, no job experience, and no alternative job, runs a shoeshine stand. Other shoeshine operators earn $10,000 a year. Joe pays rent of $2,000 a year, and his total revenue is $15,000 a year. Joe spent $1,000 on equipment and used his credit card to buy it. The interest on a credit card balance is 20 percent a year. At the end of the year, Joe was offered $500 for his business and its equipment. Calculate Joe’s opportunity cost of production and economic profit.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 39P: A firm is considering an investment that will earn a 6 rate of return. If it were to borrow the...
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Joe, who has no skills, no job experience, and no alternative job, runs a shoeshine stand.
Other shoeshine operators earn $10,000 a year. Joe pays rent of $2,000 a year, and his
total revenue is $15,000 a year. Joe spent $1,000 on equipment and used his credit card
to buy it. The interest on a credit card balance is 20 percent a year. At the end of the
year, Joe was offered $500 for his business and its equipment. Calculate Joe’s
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