Answer to Question #109418 in Microeconomics for Roanne

Question

Question 1
Lawrence plan to start a restaurant business at a mega shopping mall. To start a business, it incurs cost and revenue. Based on the restaurant context,
(a) Identify the fixed and variable inputs for this business by providing examples.
(b) Discuss TWO (2) main types of costs to start this business by providing relevant examples to explain both costs. (hint: it can be based on your answer in (a).)

Answer 1

a) an example of fixed cost can be a rent, which has to be paid no matter how many clients Lawrence has, the same with wages for stuff(if revarding system is not established). An example of variable cost is any raw materials for food cooking, like meat, vegetables, etc. It is also bills for electrisity, water and gas.

b) Lawrens has to rent a place, so there is rent, he has to decorate that place, so that is furnitude and expenditures on design artist, he also has to pay for marketing compaign, to hire workers and to establish trade conections with suppliers of products.