Question
Charles has decided to open alawn-mowing company. To doso, he purchases mowing equipment for $7 comma 000 7,000, buys gasoline ($2.50 2.50 in gas is
Charles has decided to open alawn-mowing company. To doso, he purchases mowing equipment for $7 comma 000
7,000, buys gasoline ($2.50
2.50 in gas is required to mow eachyard), and pays a helper $25.00
25.00 per yard. Prior to opening the lawncompany, Charles earned $5 comma 000
5,000 as a lifeguard at the neighborhood swimming pool. Assume the money he used to purchase the mowing equipment could otherwise have earned 5
5 percent per year in the bank and that the mowing equipment depreciates at 25
25 percent per year. Charles plans to mow 400
400 yards per year.
What isCharles's implicit cost ofproduction?
$________ per year
(Enter your response as aninteger.)
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