Question

JC✨

求解

Problem-Based Learning
Cost of Production
Scenario 1: Preparation for New Business
Shawn wants to start a new business by selling watermelon juice. In particular, he withdrew $500,000
of his saving from the commercial bank to cover his expense (for new business). Below is a list of
costs associated with the production inputs:
Table 1
Items
Rent (Location)
Wage
Ingredient
Machine Rental
Electricity Fee
Advertisement Fee
Straw
Table Rental
Plastic Cup
Plastic Cup Lids
Plastic Bag
Decoration Service Fee
Cost
$2,000 per day
$160 per hour
$6 per cup of juice
$14 per day
$21 per hour
$73 per day
$0.12 per straw
$5.5 per day
$0.7 per cup
$0.1 per lid
$0.5 per bag
$35 per day
Problem 1: Do we take into consideration the investment funds, Shawn's deposit ($500,000), when
we compute the economic cost? Why?
Problem 2: In Economics, we generally divide the production inputs into two categories, fixed input
and variable input. Could you please categorize the production inputs, listed in Table 1, into fixed
and variable inputs?

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