Devlin, a programmer, earned $30,000 in 2010, but in 2011, he opened a body board manufacturing business. After one year, he
submitted the data on the right to his accountant.
Devlin's explicit costs are ____ and implicit costs are ____
A. $32,500; $56,200
B. $41,500; $56,200
C. $51,200; $32,500
D. $32,500; $51,200
E. $56,200; $41,500
Devlin's economic profit is _____
A. $83,700
B. $20,000
C. $168,800
D. $187,500
E. $136,300
Question Facts
He stopped renting out his cottage for $6,000 a
year and used it as his factory. The market value
of the cottage increased from
$64,000 to $69,000.
He spent $15,000 on materials, phone, utilities,
etc.
He leased machines for $14,000 a year.
He paid $2,500 in wages.
He used $5,000 from his savings account, which
pays 4 percent a year interest.
He borrowed $10,000 at 10 percent a year from
the bank.
He sold $220,000 worth of body boards.
Normal profit is $20,000 a year.
