Farmer McDonald gives banjo lessons for $20 an hour. One day, he spends 10 hours planting $100 worth of seeds on his farm. What opportunity cost has he incurred? What cost would his accountant measure? If these seeds yield $200 worth of crops, does McDonald earn an accounting profit? Does he earn an economic profit?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
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Chapter12: The Cost Of Production
Section12.1: What Are Costs?
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Farmer McDonald gives banjo lessons for $20 an hour. One day, he spends
10 hours planting $100 worth of seeds on his farm. What opportunity cost has he incurred?
What cost would his accountant measure? If these seeds yield $200 worth of crops, does
McDonald earn an accounting profit? Does he earn an economic profit?

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