Coffee Shop Worksheet - Consider a coffee shop
Coffee Shop Worksheet
Consider a coffee shop that has a fixed cost of $50. Complete the following table:
|
Output |
Fixed Cost (FC) |
Variable Cost (VC) |
Total Cost (TC) |
Marginal Cost (MC) |
Average Fixed Cost (AFC) |
Average Variable Cost (AVC) |
Average Total Cost (ATC) |
|
1 |
$10 |
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|
2 |
18 |
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|
3 |
30 |
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|
4 |
45 |
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|
5 |
65 |
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|
6 |
70 |
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|
7 |
100 |
This coffee shop is currently up for sale. Molly has been interested in making a career change and is seriously considering taking the $25,000 she has been saving to invest in purchasing this coffee shop. She is currently making 10% interest on this investment. Molly is working in a salon where she makes $15 dollars an hour and typically works 35 hours a week. She doesn’t receive any benefits at this job and isn’t expecting any at the coffee shop at least in the short run.
Based on this information, what should Molly do? Should she purchase the coffee shop or stay at the salon?
Action Items:
· Complete the table above using the given information.
· Consider the scenario presented and evaluate Molly’s opportunity costs (for this ignore taxes).
· Prepare advice for Molly based on your calculations. Remember to support this with ideas from the readings this week and any other outside sources you might have used.
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Rating:
/5
Solution: Coffee Shop Worksheet - Consider a coffee shop