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Justin Brimer owns his own taxi, for which he bought a $19,000 permit to operate two years ago. Mr. Brimer earns $38,000 a year operating

Justin Brimer owns his own taxi, for which he bought a $19,000 permit to operate two years ago. Mr. Brimer earns $38,000 a year operating as an independent but has the opportunity to sell the taxi and permit for $95,000 and take a position as dispatcher for Carter Taxi Co. The dispatcher position pays $35,000 a year for a 36-hour week. Driving his own taxi, Mr. Brimer works approximately 51 hours per week. If he sells his business, he will invest the $95,000 and can earn a 20 percent return.

Required
a.

Determine the opportunity cost of owning and operating the independent business.

Opportunity Cost
b-1.

Calculate the earnings of Justin Brimer operating as an independent.

Operating as an Independent

b-2.

Calculate the earnings of Justin Brimer working as a dispatcher.

Working as a dispatcher
b-3.

Based solely on financial considerations, should Mr. Brimer sell the taxi and accept the position as dispatcher? YES or NO

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