(solution) Use the following information to work Problems 14 and 15. Lee is

(solution) Use the following information to work Problems 14 and 15. Lee is

Use the following information to work Problems 14 and 15. Lee is a computer programmer who earned $35,000 in 2009. But on January 1, 2010, 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.

14. Calculate Lee?s opportunity cost of production and his economic profit.

15. Lee?s accountant recorded the depreciation on his cottage during 2010 as $7,000. According to the accountant, what profit did Lee make?