Question
Your mother owns and runs an arts and craft store, and the business is doing well. She would have otherwise been employed as a high
Your mother owns and runs an arts and craft store, and the business is doing well. She would have otherwise been employed as a high school geography teacher making $80,000 a year or as an interior decorator making $68,000 a year. She owns the building in which her shop is located, which she could have rented out for $24,000 a year. Her annual revenue from the shop is $430,000 and she employs four workers, each of whom earns $30,000 a year. On average, she spends $206,000 per year traveling, purchasing, and shipping unique merchandise for resale at her store. Based on this information what is your mom's opportunity cost of doing the arts and craft business in terms of dollar value? Now, suppose at the store she had to pay an extra $25,000 per year for health insurance from her pocket, how does this change her opportunity cost?
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