A new technology lets beer drinkers draw their own taps, like the soda fountain at McDonald’s.
The technology can measure and charge by the sip. It costs $25,000 for a wall-mounted, 20-tap system, plus a monthly maintenance fee.

a. What is the total fixed cost of operating one self-serve system? What are its variable costs of providing self-serve beer?

b. Explain how the fixed costs, variable costs, and total costs of beer served by a person differ from those of self-served beer.

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