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Opportunity Cost - payments if he were to lease his rig to...

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Burton’s explicit costs are: $18,000 in fuel, maintenance, etc. His implicit costs are: $15,000 of foregone payment for truck leasing His opportunity costs are: $ 18,000 operating cost +$15,000 of foregone payment= $33,000 total cost. Burton’s explicit cost for driving and maintaining his own rig is $18K per month for fuel, maintenance, etc. Explicit cost is the monetary opportunity cost that is used by a person to use market-supplied resources. Burton’s implicit cost for operating his own rig would be $5k that he would forgo in salary if he was employed by a trucking firm. Burton could also save $18K in operating cost and make $15k in
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Unformatted text preview: payments if he were to lease his rig to another trucker. I would recommend that Burton lease out his rig for $15k per month which would more than double the amount he would make operating his own rig while paying $18,000 in operating cost out of $25,000 with $7,000 left over for his profit. This plan would also prove beneficial for Burton considering he would only make $5,000 in salary if he was employed by a trucking firm. Reference Thomas, C. & Maurice, S. (2011). Managerial economics : Foundations of business analysis and strategy (10th ed.). New York: McGraw-Hill...
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