E201 (Arano) NAME: Worksheet 3: Production \& Costs (25 points) Instructions: Work on the following questions/problems. Be sure to answer all questions (and sub questions within a problem). - Use this as your answer sheet (adjust spacing as necessary). Show solutions. - This worksheet can be handwritten (but be sure it is legible) and then scanned to upload. Please scan multiple pages in a single document. If you don't have a scanner, use your phone to scan using any of the free apps available (e.g. CamScanner). If you have a tablet or a device that allows you to draw/write on the screen, you are welcome to go that route as well. - Please save your work in any of the following formats only: Word, pdf, or jpeg - Upload work to the designated link in Canvas 1. (10 points) Joe runs a small boat factory. He can make 10 boats per year and sell them for $25,000 each. It costs Joe $150,000 for the raw materials (fiberglass, wood, paint, and so on) to build 10 boats. Joe has invested $400,000 in the factory and equipment needed to produce the boats: $200,000 from his own savings and $200,000 borrowed at 10% interest (assume that Joe could have loaned his money out at 10%, too). Joe can work at a competing boat factory for $70,000 per year. a. What is the total revenue (TR) Joe can earn in a year? b. What are the explicit costs Joe incurs while producing 10 boat (i.e., calculate total explicit costs)? c. What are the total opportunity costs of producing 10 boats (explicit and implicit costs; i.e., calculate total opportunity costs)? d. Calculate Joe's accounting profit. e. Calculate Joe's economic profit. f. Is it truly profitable for Joe to operate his boat factory? Explain in 2 sentences