Question

assume you are planning a spring break ski trip to Colorado. You are preparing a budget of your costs. You are staying at a lodge that has a special where the lodge charges you $80 per week for the ski lift regardless of how many times you ride. You believe you will ride the ski life 40 times during the week. The ski lift charge is an example of a

Answer 1

Lodge charges = $80 per week for the ski lift regardless of number of rides

The ski lift charge is an example of a fixed cost since it does not depend on the number of rides.

$80 per week will be charged whatever be the number of rides.

A fixed cost does not change due to changes in the volume of output within the relevant range.

With the increase in the number of units, per unit fixed cost goes on decreasing.

In the given case, the number of rides is 40, hence per ride charge for ski lift is = 80/40

= $2

Suppose the number of rides increases to 80, per ride charge for ski lift will be = 80/80

= $1

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