Norman Dowd owns his own taxi, for which he bought a $11,500 permit to operate two years ago. Mr. Dowd earns $34,500 a year operating as an independent but has the opportunity to sell the taxi and permit for $44,000 and take a position as dispatcher for Carter Taxi Company The dispatcher position pays $35,000 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $44,000 and can earn a 11 percent return. Required a. Determine the opportunity cost of owning and operating the independent business. b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher? a. Opportunity cost b. Operating as an independent Working as a dispatcher Should Mr. Dowd sell the taxi and accept the position as dispatcher? $ 44,000

Norman Dowd owns his own taxi, for which he bought a $11,500 permit to operate two years ago. Mr. Dowd earns $34,500 a year operating as an independent but has the opportunity to sell the taxi and permit for $44,000 and take a position as dispatcher for Carter Taxi Company The dispatcher position pays $35,000 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $44,000 and can earn a 11 percent return. Required a. Determine the opportunity cost of owning and operating the independent business. b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher? a. Opportunity cost b. Operating as an independent Working as a dispatcher Should Mr. Dowd sell the taxi and accept the position as dispatcher? $ 44,000

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 5PA

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