Charles has decided to open a lawnmowing company To do so he

Charles has decided to open a? lawn-mowing company. To do? so, he purchases mowing equipment for ?$4 comma 000?, buys gasoline ?($1.50 in gas is required to mow each? yard), and pays a helper ?$20.00 per yard. Prior to opening the lawn? company, Charles earned ?$3 comma 000 as a lifeguard at the neighborhood swimming pool. Assume the money he used to purchase the mowing equipment could otherwise have earned 2 percent per year in the bank and that the mowing equipment depreciates at 10 percent per year. Charles plans to mow 200 yards per year.

What is? Charles\'s implicit cost LOADING... of? production? ?Charles\'s implicit cost of production is ? ( ......... )$ nothing per year. ?(Enter your response as an? integer.)

Charns has dnadad to open a ll -m wing com pam a d? so hn purchases mo ing nqupman o $4 00 hu casnine $.1. a in gasis require rh yard and pays a halpe?2 per yar Prar n op nma t co pam Chari saarnad 3 0 D as a lif guard at hn D ma a What is Charles\'s implicit cst of pruduction? Charies\'s implicit oost or production is $ per year. fEnter your response as an integer.

Solution

Implicit costs are those costs which are forgone for taking up another activity.

It includes, $3000 earned as a lifeguard, 2 percent interest earned from bank, 10 percent depreciation of equipment

IC = 3000+(0.02*4000)+0.1*4000 = $3480