Scenario 12-10
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 12-10.The explicit cost for one birdhouse is

Question

Quizplus · Accepted Answer

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

Answer: Walter should continue building birdhouses as the opportunity cost of his time (what he could earn at the hardware store) is less than what he can earn selling a birdhouse ($20).

Scenario 12-10 Walter Builds Birdhouses.He Spends $5 on the Materials for Each