Question: The opportunity cost of production last year was_________

How do you solve for this question?

Mike operates a bike retail store and repair shop, Mike's Bikes. Lastyear, the market value of thefirm's showroom and workshop increased from$600,000 to$675,000; the market value of the inventory of unsold bikes decreased from$400,000 to$320,000; and the market value of thefirm's tools remained constant at$5,000.

The firm paid manufacturers$770,000 for bikes.

The cost of electricity and IT services was$25,000.

The wages paid to shop assistants was$50,000.

Mike is thefirm's entrepreneur. He also workspart-time at a bike manufacturer for 50 weeks a year that pays$40 per hour. The manufacturer wants Mike to work fulltime, but instead he does repairs atMike's Bikes for 10 hours a week.

Normal profit in bike retailing is$40,000 per year.

The interest rate is 5 percent per year.