Scenario 13-7
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 13-7.What are Wanda's implicit costs per glass?
A) $0.18
B) $0.10
C) $0.08
D) $0.02

Question

Quizplus · Accepted Answer

Wanda's implicit costs per glass are the opportunity cost of her labor, which is $0.10.

The best choice for Wanda would depend on her goals. If her goal is to maximize profits, she should produce 300 glasses since the revenue from selling them ($150) is greater than the total cost ($41). If her goal is to minimize costs, she should consider reducing the amount of sugar and lemons used, as those are the most expensive inputs per glass. However, this may also affect the taste and quality of the lemonade, which could impact demand and revenue.

Scenario 13-7 Wanda Owns a Lemonade Stand. She Produces Lemonade Using Five