32 Self-Service Espresso Bars Automated, self-service espresso kiosks are now being introduced in some stores. The machines can grind beans and deliver latte and espresso coffee and take credit and debit cards and cash. The kiosks cost €40,000 per unit, but must be installed and maintained. Self-service kiosks remove the labour costs for service. The kiosks must be refilled by store staff with coffee beans and milk.

Source: MSNBC, 1 June 2008 a What is the total fixed cost of operating one self-service kiosk?

b What are the variable costs of providing coffee at a selfservice kiosk?

c Assume that a coffee machine in a traditional service café costs less than €40,000. Explain how the fixed costs, variable costs and total costs of traditionally served and self-served coffee differ.

d Sketch the marginal cost and average cost curves implied by your answer to part (c).