Problem
Lee is a computer programmer who earned $35,000 in 2011. But on January 1, 2012, Lee opened a body board manufacturing business. At the end of the first year of operation, he submitted the following information to his accountant:
- He stopped renting out his cottage for $3,500 a year and used it as his factory. The market value of the cottage increased from $70,000 to $71,000.
- He spent $50,000 on materials, phone, etc.
- He leased machines for $10,000 a year.
- He paid $15,000 in wages.
- He used $10,000 from his savings account, which earns 5 percent a year interest.
- He borrowed $40,000 at 10 percent a year.
- He sold $160,000 worth of body boards.
- Normal profit is $25,000 a year.
Calculate Lee's opportunity cost of production and his economic profit.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.