Charles has decided to open a lawn-mowing company. To do so, he purchases mowing

Question

Charles has decided to open a lawn-mowing company. To do so, he purchases mowing equipment for $3,000, buys gasoline ($2. 30 in gas is required to mow each yard), and pays a helper $15.00 per yard. Prior to opening the lawn company, Charles eamed $4,000 as a lifeguard at the neighborhood swimming pool. Assume the money he used to purchase the mowing equipment could otherise have eamed 1 percent per year in the bank and that the mowing equipment depreciates at 20 percent per year. Charles plans to mow 300 yards per year What is Charles's implicit cost of production? Charles's implicit cost of production is $per year (Enter your response as an integer)

Explanation / Answer

Solution: $4030

Working: Implicit Costs are the non-monetary benefits, thus equals $4000 + $3000*1% = $4,030

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