Maryann and Don want to open their own deli.To do so, Maryann must give up her job, at which she earns $20, 000 per year, and Don must give up his part-time job, at which he earns $10, 000 per year.They must liquidate their money market fund, which earns $1, 000 interest annually.The rent on the building is $10, 000 per year, and expenses for such necessities as utilities, corned beef, and pickles are $35, 000 annually.What minimum amount of revenue per year would make it worthwhile, financially, for Maryann and Don to operate the deli?
A)$10, 000
B)$35, 000
C)$45, 000
D)$31, 000
E)$76, 000

Question

Quizplus · Accepted Answer

Maryann and Don need to cover their opportunity costs and expenses. The opportunity costs are $20,000 (Maryann's job) + $10,000 (Don's job) + $1,000 (interest) = $31,000. The expenses are $10,000 (rent) + $35,000 (utilities and supplies) = $45,000. Therefore, the minimum revenue needed is $31,000 + $45,000 = $76,000.

Maryann and Don Want to Open Their Own Deli