You set up a lemonade stand. The stand itself costs $200. The ingredients for each cup of lemonade cost $0.50. Suppose every day you make and sell 500 cups of lemonade. Also assume each cup of lemonade is sold at $2.00 а. Please calculate Total Variable cost (TVC), Total fixed cost (TFC), Total Cost (TC), Total revenue and profit for making 500 cups of lemonade. Please calculate Average variable cost (AVC), average fixed cost (AVC) and average total cost (ATC) for making 500 cups of lemonade. C. Why is the gap (distance) between a typical ATC and AVC curves become smaller as output (quantity) levels increase? Under what condition(s) will the gap disappear?

You set up a lemonade stand. The stand itself costs $200. The ingredients for each cup of lemonade cost $0.50. Suppose every day you make and sell 500 cups of lemonade. Also assume each cup of lemonade is sold at $2.00 а. Please calculate Total Variable cost (TVC), Total fixed cost (TFC), Total Cost (TC), Total revenue and profit for making 500 cups of lemonade. Please calculate Average variable cost (AVC), average fixed cost (AVC) and average total cost (ATC) for making 500 cups of lemonade. C. Why is the gap (distance) between a typical ATC and AVC curves become smaller as output (quantity) levels increase? Under what condition(s) will the gap disappear?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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