Answer to Question #313151 in Microeconomics for shashi

Question

You are thinking about setting up a lemonade

stand. The stand itself costs $200. The ingredients

for each cup of lemonade cost $0.50.

a. What is your fixed cost of doing business?

What is your variable cost per cup?

b. Construct a table showing your total cost,

average total cost, and marginal cost for output

levels varying from 0 to 10 gallons. (Hint:

There are 16 cups in a gallon.) Draw the three

cost curves.

Answer 1

What is your fixed cost of doing business?

The fixed cost is $200

What is your variable cost per cup?

$0.50