Question

Marsh is deciding whether or not to open a lemonade stand. She expects to sell 20 cups of lemonade for $1 per cup. She already made a sign that cost her $10 and will have $15 worth of additional costs for cups and lemonade mix if she decides to open the stand.
If Marah decides to open the lemonade stand, how much profit will she earn?

Answer 1

Answer:

none

Explanation:

If Marsh expects to sell 20 cups of lemonade for $1 per cup then that is a total of $20. Unfortunately, Marsh has already spent $10 and is expecting to spend another $15 which would mean that his total costs would be $25 (10 + 15). This is a whole $5 more than what he is expecting to make from selling the 20 cups of lemonade. Therefore, if he does open the lemonade stand he will not earn any profit and will be at a $5 loss.

Answer 2

Answer:

$5 profit

Explanation:

$10 cost to make the sign is sunk cost and should be ignore when making the decision! She should open the lemonade stand.