Question

Thomas sets up a new coffee shop in a building he owns. He puts $200,000 of his money into the business. He could have got 8% interest on this money if he had deposited it in an investment account. He gives up his job, which paid him $50,000 a year. He could rent the building out for $10,000 a year. His business incurs explicit costs of $80,000 (excluding any salary for himself). Based on the information above, choose the correct answer for each of the following questions.

          Thomas sets up a new coffee shop in a building he owns. He puts $200,000 of his money into the business. He could have got 8% interest on this money if he had deposited it in an investment account. He gives up his job, which paid him $50,000 a year. He could rent the building out for $10,000 a year.
His business incurs explicit costs of $80,000 (excluding any salary for himself).
Based on the information above, choose the correct answer for each of the following questions.

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Thomas sets up a new coffee shop in a building he owns. He puts 200,000 of his money into the business. He could have got 8% interest on this money if he had deposited it in an investment account. He gives up his job, which paid him $50,000 a year. He could rent the building out for $10,000 a year.
His business incurs explicit costs of80,000 (excluding any salary for himself).
Based on the information above, choose the correct answer for each of the following questions.

Added by Carlos B.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Oluwadamilola Ameobi

08/29/2023

Step 1

The opportunity cost is the amount of money Thomas could have earned if he had chosen the next best alternative. In this case, the next best alternative is depositing the money in an investment account and earning 8% interest. Opportunity cost = $200,000 * 8% = Show more…

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Thomas sets up a new coffee shop in a building he owns. He puts $200.000 of his money into the business.He could have got 8% interest on this money if he had deposited it in an investment account. He gives up his job. which paid him $50.000 a year.He could rent the building out for $10.000a year. His business incurs explicit costs of $80.000(excluding any salary for himself) Based on the information above,choose the correct answer for each of the following questions.

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