Question

Looking Closely at Cost and Competition Watch this video (Revenues, Profits, and Price) to help you prepare for this week’s discussion: Reply to these prompts using the company for which you currently work, a business with which you’re familiar, or the dream business you want to start: What are some key fixed and variable costs for this business? Remember, fixed costs do not change when output changes. That is, fixed costs remain even if the company is producing nothing. Variable costs increase as output increases.

Answer 1

consider the business I want to start is a restaurant and in this regard the cost can be divided into two components which is fixed cost and variable cost

Fixed cost is a cost that doesn't change with output and in the restaurant business the fixed cost can be the machinery cost which involves cooking and the land cost and the construction cost to the restaurant is my own.

variable cost is a cost that is dependent on the output and this include the number of labour appointed and this is on the basis of the customer demand and the raw material that is used for cooking and other materials which helps to add on to the process.