Article Farms in Downtown Tokyo PDF

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Is the annual cost of the farm less than, equal to, or greater than ¥20MM per year? Why or why not? I think the annual cost of the farm is greater than ¥20MM per year because the calculation that the person showing Professor Hermalin was taken from an accountant's perspective. However, if we are looking at the annual cost of the farm from an economist’s perspective, the annual cost will be greater, due to opportunity costs. Opportunity costs are other values that the company, Pasona gave up while doing the farming. Some of the possible opportunity costs that can be considered and made the costs to be greater than ¥20MM per year are: - Instead of using the basement of the headquarters for farming, the company could have been able to use the basement for some other profitable businesses, or even maybe use the space to expand the office. - If Pasona is not using the basement to expand the business, the company can rent or lease out the basement to earn additional revenue. - The youth labor that is used to become farmers could have been able to go off the side, continue their education, as the CEO believes in education. Then, these youth could have added additional value to the current business of Pasona The economic cost is calculated by adding the accounting costs and opportunity costs. Thus, with ¥20MM being the accounting costs, and adding the opportunity costs, for example, ¥10MM would made the economic costs to be ¥30MM. Therefore, the annual cost of the farm is greater than ¥20MM per year, per economist....