Scenario 13-6
Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 13-6.An economist would calculate Tony's total cost to equal
A) $130.
B) $250.
C) $300.
D) $380.

Question

Quizplus · Accepted Answer

Tony's total cost includes the cost of planting the seeds ($130) and the opportunity cost of giving up his time teaching guitar lessons. Since he charges $25 per hour for lessons and spent 10 hours planting seeds, his opportunity cost is $250. Adding the cost of planting seeds to his opportunity cost gives a total cost of $380.

Scenario 13-6 Tony Is a Wheat Farmer, but He Also Spends Part