Maryann and Don want to open their own deli.To do so,Maryann must give up her job,where she earns $20,000 per year,and Don must give up his part-time job,where 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 the expenses of such necessities as utilities,corned beef,and pickles are $35,000 annually.The minimum amount of revenue per year that would make it worthwhile,financially,for Maryann and Don to run the deli is _____
A)$10,000.
B)$35,000.
C)$45,000.
D)$31,000.
E)$76,000.

Question

Quizplus · Accepted Answer

To calculate the minimum amount of revenue that would make it financially worthwhile for Maryann and Don to run the deli, we need to consider all the costs they would incur, including the opportunity costs of giving up their jobs and the interest from their money market fund, as well as the explicit costs of rent and other expenses. The total cost is the sum of their lost wages ($20,000 + $10,000), lost interest income ($1,000), rent ($10,000), and other expenses ($35,000), which equals $76,000.

Maryann and Don Want to Open Their Own Deli