Andy, a 10-year-old boy, wants to sell lemonade on a hot summer day. He hopes to make enough money to buy a new iPod. Joe, his elder brother, tries to help him compute his prospect of doing so. The following is the relevant information:
Variable costs
Lemonade ........ $0.30 per cup
Paper cups ........ $0.10 per cup
Fixed costs
Table and chair ...... $36.00
Price ............ $1.00 per cup
The following graph depicts the dollar amount of cost or revenue on the vertical axis and the number of lemonade cups sold on the horizontal axis.

a. Draw a line that depicts the total cost.
b. Draw a line that depicts the total revenue.
c. Identify the break-even point.
d. Identify the area representing profit.
e. Identify the area representingloss.

  • CreatedFebruary 07, 2014
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