Answer to Question #246568 in Microeconomics for Jaa

Question

Assume that you are an entrepreneur of a hotel. what are the fixed and variable costs to be carried out in the business?

Answer 1

Solution:

Fixed costs refer to costs that remain constant regardless of output produced by a business, while variable costs refer to costs that vary or change with the amount of output produced.

The fixed costs to be carried out by the hotel business includes the following:

·        Rent

·        Salaries

·        License fees.

·        Loan payments.

·        Insurance premiums.

The variable costs to be carried out by the hotel business include the following:

·        Hourly wages.

·        Food.

·        Water and electricity utilities.

·        Equipment repairs.

·        Delivery and transport expenses.

·        Car repairs.

·        Sales commissions.