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Opportunity cost of the resource used

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.

*Need help computing the graduates explicit costs per month and his implicit costs per month? What is the difference between these two items?

*Need assistance to outline opportunity cost of the resource used by graduate each month

*What advice would I give the graduate to direct him with future cash flow, job duties and opportunities to improve costs?

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*Need help computing the graduates explicit costs per month and his implicit costs per month? What is the difference between these two items?

Explicit costs = Operating costs =$18000

Implicit costs will include opportunity costs also
=Explicit costs+ Opportunity costs
=18000+15000+5000
=$38000

Hence the difference ...

Solution Summary

Response discusses the opportunity cost of the resource used

$2.19