Theo sells baby rattles at $3 per unit and each month he sells 3,000 units out of the back of his wagon in the city park. Theo has no employees and estimates he could rent his wagon to another entrepreneur for $2,000 eachmonth. He also knows that he could earn about $5,000 a month as a model. He pays $1 per unit for plastic, his only raw material. Question: Should Theo continue to sell his baby rattles in the park? Explain

Theo sells baby rattles at $3 per unit and each month he sells 3,000 units out of the back of his wagon in the city park. Theo has no employees and estimates he could rent his wagon to another entrepreneur for $2,000 eachmonth. He also knows that he could earn about $5,000 a month as a model. He pays $1 per unit for plastic, his only raw material. Question: Should Theo continue to sell his baby rattles in the park? Explain

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Transaction Costs, Asymmetric Information, And Behavioral Economics

Section: Chapter Questions

Problem 5.11P

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