Problem: Recent graduate was given by father a $350,000 tractor trailer. Graduate joked with friends he was making $25,000 per month in jobs while his operating costs such as fuel, insurance, etc run close to $18,000 per month.
Tractor trailers similar to new graduate rent for $15,000 per month and if graduate would go to work with competing trucking company, he would earn $5000 monthly. Graduate is proud he is generating a net cash flow of $7,000 ($25,000 - $18,000) per month.
1) Need help computing the graduates explicit costs per month and his implicit costs per month? What is the difference between these two items?
2) Need assistance to outline opportunity cost of the resource used by graduate each month
3) What advice would I give the graduate to direct him with future cash flow, job duties and opportunities to improve costs?