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.An economist would calculate the total cost for one birdhouse to be
A) $5.
B) $8.
C) $9.
D) $13.

Question

Quizplus · Accepted Answer

The cost of materials for one birdhouse is $5. Additionally, Walter's opportunity cost for his time spent building the birdhouse is $2 (since he could earn $8 in one hour at the hardware store and it takes him 30 minutes to build the birdhouse). Therefore, the total cost for one birdhouse is $5 + $2 = $7. Since he can sell the birdhouse for $20, his profit per birdhouse is $13.

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