Question

Just need part d

See page 246 04 Question (5 points) You and your friends have decided to build a skateboard ramp behind your house. You have already purchased $500 in materials and are considering renting an electric saw. It costs $20/hour to rent an electric saw. You estimate it will take 6 hours to build the ramp. If you decide to use your saw, which is a handsaw, you will not have to pay anything to rent an electric saw, but it will take 15 hours to build the ramp. Regardless of the decision, you will need to ask for time off from your job, which pays $8/hour.

Answer 1

a) Explicit cost when using your handsaw is direct cost which is only material=$500

b)renting the saw total explicit cost=material cost+cost of renting for 6 hours=599+6*29=$620

c) implicit cost of using handsaw is opportunity cost of foregoing employment earning for 15 hours=15*8=$120

d) renting will have implicit cost of foregoing employment for 6 hours =8*6=$48

e) Total cost with renting =implicit+explicit=48+620=$668

Without renting=500+120=$620

So it is cheaper to use your own saw