When Burton Cummings graduated with honors from the Canadian Trucking Academy, his father gave him a $350,000
a. How much are Burton Cummings’s explicit costs per month? How much are his implicit costs per month?
b. What is the dollar amount of the opportunity cost of the resources used by Burton Cummings each month?
c. Burton is proud of the fact that he is generating a net cash flow of $7,000 (5 $25,000 −$18,000) per month, since he would be earning only $5,000 per month if he were working for a trucking firm. What advice would you give Burton Cummings?
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,...
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