Scenario 12-7
Wanda owns a lemonade stand.She produces lemonade using five inputs: water,sugar,lemons,paper cups,and labor.Her costs per glass are as follows: $0.01 for water,$0.02 for sugar,$0.03 for lemons,$0.02 for cups,and $0.10 for the opportunity cost of her labor.She can sell 300 glasses for $0.50 each.
-Refer to Scenario 12-7.What are Wanda's explicit costs per glass?
A) $0.18
B) $0.10
C) $0.08
D) $0.02

Question

Quizplus · Accepted Answer

Explicit costs are the direct, out-of-pocket payments for inputs, which include water, sugar, lemons, and cups. These total $0.08 per glass ($0.01 + $0.02 + $0.03 + $0.02). The opportunity cost of labor is not an explicit cost.

Scenario 12-7 Wanda Owns a Lemonade Stand.She Produces Lemonade Using Five Inputs