Thirsty Thelma Owns and Operates a Small Lemonade Stand

question 161

Multiple Choice

Thirsty Thelma owns and operates a small lemonade stand.When Thelma is producing a small quantity of lemonade, she has few workers and her equipment is not being fully utilised.Because she can easily put her idle resources to use:

• A)the marginal cost of an extra worker is large
• B)the marginal product of an extra worker is small
• C)the marginal cost of one more glass of lemonade is small
• D)her lemonade stand is likely to be crowded with workers

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Definitions:

Total Cost

The complete sum of all expenses incurred in the production and delivery of goods or services.

Marginal Cost

The additional expense faced by a business when its production volume is increased by a single unit.

Total Variable Cost

The aggregate of costs that vary in relation to the volume of output or activity, such as materials and labor expenses.

Total Fixed Cost

The sum of all costs that do not change with the level of output in the short term.