Scenario 13-11
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 13-11. An economist would calculate the total profit for one birdhouse to be

Question

Quizplus · Accepted Answer

The economist would consider both the explicit cost of materials ($5) and the implicit cost of Walter's time. Walter could earn $4 in 30 minutes at the hardware store, so the total cost is $9. Selling the birdhouse for $20 results in a profit of $11.

Scenario 13-11 Walter Builds Birdhouses. He Spends $5 on the Materials for Materials