Question

Shalini spent Rs 2000 to set up a lemonade stand and the average cost of making lemonades is Rs 5/glass. If she sells 300 glasses at Rs 10 per glass, she has a

• A. Profit of Rs 500
• B. Loss of Rs 500
• C. Profit of Rs 1000
• D. Loss of Rs 1000

Answer 1

The correct option is B

Loss of Rs 500

TFC = Rs 2000
TVC = AVC x q
=300 x 5 = Rs 1500
TC= TFC + TVC
= Rs 2000 + Rs 1500
= Rs 3500

TR = 300 x 10 = Rs 3000
Since TR<TC, Shalini is making a loss.
Loss = TR - TC = Rs 3500 - Rs 3000= Rs 500