Question

Scenario 13-8 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 13-8. what are wanda's explicit costs per glass?
a. $0.10
b. $0.18
c. $0.08
d. $0.02

Answer 1

The answer is B. $0.18. This is because if you add all the prices of water, sugar, lemons, cups, and the opportunity cost of Wanda’s labor ($0.01 + $0.02 + $0.03 + $0.02 + $0.10) you will get B as your answer. There is no need to include the statistic that Wanda can sell 300 glasses of lemonade for $0.50 each because it is extra information since we are not trying to find out how much she sells each glass of lemonade for. But rather, how much money she uses to make one glass of lemonade.

Answer 2

Answer:

C) $0.08

Explanation:

Wanda's explicit costs are her accounting costs: $0.01 for water, $0.02 for sugar, $0.03 for lemons, and $0.02 for cups. Explicit costs do not include opportunity costs (which are implicit costs). Explicit costs are all the costs incurred in producing lemonade.

Wanda's explicit costs = $0.01 + $0.02 + $0.03 + $0.02 = $0.08