variable cost and average marginal cost. simple economics?

Question

im having some trouble doing my hw and i think its wrong because im finding the variable cost incorrectly but here is the problem that im suppose to do.

A lemonade stand costs $200and the ingredients for each cup of lemonade costs .50 cents

a) what is your fixed cost per cup?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 0-10 gallons.(hint: there are 16 cups in a gallon)


my answers converted to cups
Q(total cups) | total cost | average total cost | marginal cost
0 | 200 | x | x
16 | 208 | 13 | .5
32 | 216 | 6.75 | .5
48 | 224 | 4 2/3 . | .5
64 | 232 | 3 5/8 | .5
80 | 240 | 3 | .5
96 | 248 | 2 7/12 | .5
112 | 256 | 2 2/7 | .5
128 | 264 | 2 1/16 | .5
144 | 272 | 1 8/9 | .5
160 | 280 | 1 3/4 | .5

Anonymous · Accepted Answer

Looks alright except for your marginal cost.  Do keep in mind that you're increasing your units of output by 16 cups each time but your marginal cost is still measure single cups.  So your marginal cost would be $8 each time.

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? · Answer

because you figure the marginal cost per unit ( for one) theat does NOT mean you only hve to produce one more it might be practical to produce 5 more a week for only the extra cost of wax and wick, he already has workers and tools it is unlikely he could procduce 500 mor withoug getting more machines, wax by the barrel ful extra workers etc. cost calculation is tricky. And is there a demand? are they "art candles" for just for lighting?

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variable cost and average marginal cost. simple economics?

2 Answers