Calculate Lees opportunity cost of production and his economic profit. Lee is a computer programmer who earned

Question:

Calculate Lee’s of production and his economic profit.
Lee is a computer programmer who earned $35,000 in 2011. But on January 1, 2012, Lee opened a body board manufacturing business. At the end of the first year of operation, he submitted the following information to his accountant:
• He stopped renting out his cottage for $3,500 a year and used it as his factory. The market value of the cottage increased from $70,000 to $71,000.
• He spent $50,000 on materials, phone, etc.
• He leased machines for $10,000 a year.
• He paid $15,000 in wages.
• He used $10,000 from his savings account, which earns 5 percent a year interest.
• He borrowed $40,000 at 10 percent a year.
• He sold $160,000 worth of body boards.
• Normal profit is $25,000 a year.
Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...