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8 October, 05:49

Jane grows apples on land she inherited from her grandmother. She incurs explicit costs of $200 for the trees and $60 for fertilizers. In addition, suppose her land is otherwise worth $9,000 and her labor is worth

$20,000 (this is the amount she could earn managing someone else's land instead of her own). The market price of apples is $36 per box. If at this price Jane produces 1,500 boxes of apple then her economic profit is

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  1. 8 October, 07:10
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    Economic profit = $24,740

    Explanation:

    Giving the following information:

    Jane grows apples on land she inherited from her grandmother. She incurs explicit costs of $200 for the trees and $60 for fertilizers. The market price of apples is $36 per box. At this price, Jane produces 1,500 boxes of apple.

    Suppose her land is worth $9,000 and her labor is worth

    $20,000.

    Sales = 54,000

    Fixed costs = 260

    Opportunity cost = 29,000

    Economic profit = $24,740
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