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20. John operates a small ice-cream shop by renting a unit at shopping mall. All of his ice-creams (together with the spoons) are supplied and
20. John operates a small ice-cream shop by renting a unit at shopping mall. All of his ice-creams (together with the spoons) are supplied and delivered by ice-cream manufacturers every day. (a) What are John's variable costs and fixed costs? [List out at least three items in total for the two categories of costs.] (b) Later, John found that he can only sell one half of the ice-creams in his refrigerator in a day. He then tries to sell ice bars but also can sell only half of the ice bars stored in the refrigerator. Hence, he decides to use only half of the refrigerator for storing ice-creams and use the remaining half to store ice bars, which are also supplied and delivered by the manufacturer every day. Assume John roughly sells out all the ice-creams and ice bars every day. Is there economy of scope, and why
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