Scenario 13-10
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-10.The explicit cost for one birdhouse is
A) $4.
B) $5.
C) $8.
D) $9.

Question

Quizplus · Accepted Answer

The explicit cost for one birdhouse is the cost of the materials, which is $5.

The best choice for Walter would depend on his goals.

If he wants to maximize his income from building birdhouses, he should calculate his profits. His profit per birdhouse would be ($20 selling price - $5 materials cost - $4 wage cost for 30 minutes of work) = $11. This means he could earn $22 per hour ($11 profit per birdhouse x 2 birdhouses per hour) building and selling birdhouses. In this case, the best choice for Walter would be to build and sell birdhouses.

If Walter values his free time more than his income, he may choose to work at the hardware store instead of building birdhouses. In this case, the best choice for Walter would be to work at the hardware store.

Scenario 13-10 Walter Builds Birdhouses. He Spends $5 on the Materials for Materials