iPad 3:52 PM * 100%- Transportation Economics Duwan runs a small convenient stor
ID: 1110890 • Letter: I
Question
iPad 3:52 PM * 100%- Transportation Economics Duwan runs a small convenient store. He has hired a person for $8 per hour, 8 hours per day, 7 days a week. He works in the store himself for 3 hours per day. The utility cost $900 per month, the cost of buying and transporting the goods to his store is $2900 per month. The rent rate of the place is $2500 per month. He also works at another place for 4 hours a day for $18 per hour. The minimum wage is S10 per hour. a. What is his total monthly expenditure? b. What is his monthly opportunity cost?Explanation / Answer
(a) his monthly expenditure includes:
salary to hired person + utility cost + transportation cost = (8*8*30) + 900 + 2900 = 5720
(b) his opportunity cost is the cost of next best alternative foregone, which is the 3 hours he could have worked elsewhere rather than his own store.
= 3 * 10 = 30 , here we are assuming that he get paid atleast the minimum wage for 3 hours elsewhere
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