Author Question: Lemonade anyone? Raymond decides to set up a lemonade stand every weekend for the next four weeks to ... (Read 139 times)

09madisonrousseau09 · **on:** Jul 1, 2018

Lemonade anyone? Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest x-men comic. He has to pay his brother Robert 10 as a one-time payment for him to not bully Raymond or drive his customers away. The lemons and sugar cost him 10 (the water is free) and his dad offers to set up his stall for him. He ends up making 15 his first weekend. Frank, his father notices this and advises Raymond to shut down the stall since he is making less than he is spending on the stall. What would you advice Raymond to do?

Question 2

Which of the following is FALSE?
a. The Robinson-Patman act is a part of the antitrust laws
b. Under the Robinson-Patman act it is illegal to give a price discount on goods sold to another business
c. Under the Robinson-Patman act, it is illegal to give a price discount on goods sold to final customers
d. Under the Robinson-Patman act, the only discount allowed is the one based on difference in servicing costs of different groups

ryhom · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

The anti-bullying cost that Raymond paid to Robert is unavoidable at this point and shutting down would not bring any of it back. He should continue setting up the stall since he is making 5 over his marginal cost for setting up the stall. The fixed cost should not be a part of the calculation.

Answer to Question 2

c