Here are three separate problems. If you can only answer one or two, that's fine. Thank you.
1. You have just started a restaurant business. You anticipate that the rent, utilities and cost of food for the year will amount to $35,000. Furthermore, you have had to purchase equipment worth $20,000. You could have invested that money in the bank instead, earning 4%. Finally, as a college graduate, you could instead opt to take a job paying $45,000. What is the opportunity cost of your running the business for one year?
2. You just inherited a house with a market value of $300,000, and do not expect the value to change. Each year, you will pay $1,000 for utilities and $3,000 in taxes. You can earn 6% interest on the money in the bank. Your cost of living in the house for a year is $_____.
3. You own a microbrewery that produces craft beer, using a single vat, various ingredients, and workers.
a) If you double the number of workers and ingredients, but don't add a second vat, would you expect your output (gallons per hour) to double? Explain.
b) If you double the number of workers and ingredients and add a second vat, would you expect your output (gallons per hour) to double? Explain.
1. You have just started a restaurant business. You anticipate that the rent, utilities and cost of food for the year will amount to $35,000. Furthermore, you have had to purchase equipment worth $20,000. You could have invested that money in the bank instead, earning 4%. Finally, as a college graduate, you could instead opt to take a job paying $45,000. What is the opportunity cost of your running the business for one year?
2. You just inherited a house with a market value of $300,000, and do not expect the value to change. Each year, you will pay $1,000 for utilities and $3,000 in taxes. You can earn 6% interest on the money in the bank. Your cost of living in the house for a year is $_____.
3. You own a microbrewery that produces craft beer, using a single vat, various ingredients, and workers.
a) If you double the number of workers and ingredients, but don't add a second vat, would you expect your output (gallons per hour) to double? Explain.
b) If you double the number of workers and ingredients and add a second vat, would you expect your output (gallons per hour) to double? Explain.