Econ question? Help?

Three college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the student recreation center, which pay $6,000 per year. A fully equipped facility can be leased at a cost of $8,000 per year. Additional costs are $1,000 a year for insurance and $.50 per person per hour for materials and supplies. Their service would be priced at $10 per hour per person.


A) What are fixed cost?


B) What are variable costs?


C) What is the marginal cost?


D) How many students would it take to break even?

Econ question? Help?
A) $9,000 (facility rent + insurance)


B) $0.50 per hour (materials %26amp; supplies)


C) $0.50 per hour


D) BEP = $9,000 / $9.50 = 947.37, round up to 948 hours





Keep in mind that this does not account for the opportunity cost of $6,000 per year per tutor. If you include these costs, then your BEP would be $21,000 / $9.50 = 2,210.53 or 2,211 student hours.





Good luck!
Reply:The fixed costs would include the lease for the facility and the insurance. Variable costs would include the wages of the tutors and the materials these tutors would use. The rest of the question has too many unknowns to really answer. Like how many hours are these tutors willing to work, etc.