A local vendor at the county fair sells snow cones for $.50 each. When 250 snow cones are sold, each snow cone is estimated to have $.10 in variable costs and $.15 in fixed costs. A local school group plans on attending the fair next week and wishes to purchase 50 snowcones for $.25 each. The vendor can sell as many as 400 snowcones per day. What is the minimum price the vendor should charge for the snowcones?

Question

Quizplus · Accepted Answer

The minimum price should cover the variable costs, which are $.10 per snow cone. Fixed costs are already covered by the regular sales, so they don't need to be included in the minimum price for additional sales.

A Local Vendor at the County Fair Sells Snow Cones