Wally started a weekend widget stand on his landlord's front lawn with a $2000 inheritance (owner investment). He relied on his brightly-colored stand, drive-by traffic, and word-of-mouth to attract customers. The stand has a market value of $500. Wally paid his landlord $15 up front for a year of lawn space and spent another $150 on the stand, which has a lifespan of 4 years. The city heard about his scheme and charged him $30 for a permit.

In his first year of business, Wally acquired 1000 widgets for $1.00 each and sold all but 50 of them at 80% markup. Due to a defect in some of the product, he discounted a total of $10. Additional costs included $30.00 in UPS bills and $10.00 for 1000 bags. Sales tax amounted to $106. The Marginal Tax Rate (MTR) is 25%.