Asked by Crypto Colombian on Jul 12, 2024
Verified
Lemonade anyone? II
Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest x-men comic.He has to pay his brother Robert $10 as a one time payment for him to not bully Raymond or drive his customers away.The lemons and sugar cost him $10 (the water is free)and his dad offers to set up his stall for him.He ends up making $15 his first weekend.Frank,his father notices this and advises Raymond to shutdown the stall,while Marie his mother advises him not only to set up the stall next weekend but to increase production even more.Raymond is extremely confused.Who do you think he should listen to?
X-men Comic
A popular series of American comic books published by Marvel Comics, featuring a team of superheroes known as the X-Men who are born with superhuman abilities.
Lemonade Stand
A small, temporary drink stand often run by children, selling lemonade or similar refreshments, typically to learn about business and entrepreneurship.
Production Increase
A rise in the amount of goods and services produced by a company or economy.
- Understand the basic principles of economics and financial decision-making.
- Apply principles of economics to personal financial decisions.
Verified Answer
RR
rizwan ramzanJul 14, 2024
Final Answer :
In this case,his mother is right,he is actually making a profit of $5,since the anti-bullying cost he paid to Robert is fixed and now unavoidable and should not be a part of the calculations.Therefore he should definitely not shut down.In this case the marginal revenue is also above his marginal cost,and thus if he increases production,his profit would increase and hence he should ramp up production.
Learning Objectives
- Understand the basic principles of economics and financial decision-making.
- Apply principles of economics to personal financial decisions.