disscussion-eco
disscussion-eco
Week 3 Discussion 
“Production Costs” Please respond to one of the following:
- You are the owner of a fast-food restaurant. Given a new item that you recently advertised, you experience additional demand for your business that you do not want to ignore. Identify your fixed and variable costs at your fast-food restaurant, and explain the changes to each of these costs given the increased demand.
- What is the accounting cost of operating the business described by the information in the table below? What is the economic cost? Why do the two cost estimates differ?
| Economic Versus Accounting Costs | |
| Item: | Cost |
| Total annual labor cost (the business owner does not draw a salary) | $160,000.00 |
| Total annual cost of materials used in production | $250,000.00 |
| Annual expenditure on rent, utilities, taxes, insurance, and misc. expenses | $90,000.00 |
| The business owners’ previous annual salary when he worked for someone else | $85,000.00 |
| The business owner’s annual interest income before sinking all of his funds into this business | $15,000.00 |
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