Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gino is a computer programmer who earned$ 45,000 in 2019. But on January 1, 2020 he opened a landscaping business. At the end of 2020,

Gino is a computer programmer who earned$ 45,000 in 2019. But on January 1, 2020 he opened a landscaping business.

At the end of 2020, Gino submitted the information listed below to his accountant.

Use the question facts to calculate Gino's opportunity cost of production and economic profit.

1.

Gino stopped renting out his cottage for$ 3,500 a year and used it as his businesspremises.

2.

The market value of the cottage increased from $ 92,000to $ 98,000 .
3. He spent$ 30,000 onmaterials, phone,utilities, etc.
4. He leased machines for$ 15,000 a year.
5. He paid$ 15,000 in wages.
6. He used$ 5,000 from his savings account, which earns 5 percent a year interest.
7. He borrowed$ 20,000 at 10 percent a year from the bank.
8. He sold$ 240,000 worth of landscaping.
9. Normal profit is $25,000a year.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Roger A. Arnold

12th Edition

1285738306, 978-1285738307

More Books

Students also viewed these Economics questions

Question

Population

Answered: 1 week ago

Question

The feeling of boredom.

Answered: 1 week ago