ng Learning Use the information here and in the table below to calculate the opp

Question

ng Learning Use the information here and in the table below to calculate the opportunity cost of production and economic profit for Carla's Custom Canoes (CCC) in 2014. Suppose CCC's total revenue was $250,000 in 2014, and Carla left her job as park ranger making $49,000 to start her canoe business. $42,000 $13,000 $52,000 $ 3,200 Cost of resources owned by CCC economic depreciation $ 4,500 $ 3,500 $36,000 Cost of resources bought in the market fiberglass paint utilities foregone interest Number Opportunity cost of production: Number Economic profit:

Explanation / Answer

Question 1). Solution :-

Opportunity cost of production = Foregone salary + Foregone interest + Economic depreciation.

= 49000 + 3500 + 4500

= $ 57000.

Conclusion :- Opportunity cost of production = $ 57000.

Question 2). Solution :- Economic profit = Total revenue - Explicit costs - Implicit costs (Opportunity cost).

= 250000 - (42000 + 13000 + 52000 + 3200 + 36000) - 57000

= 250000 - 146200 - 57000

= $ 46800.

Conclusion :- Economic profit = $ 46800.

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