An important distinction is made in the calculation between fixed and variable costs. Fixed costs do not change with the units sold (at least in the short term). Variable costs depend on the units sold in the period.
1. Identify each of the following as a fixed (F) or variable (V) cost in the context of BizCafe.
a. Coffee
b. Advertising
c. Rent
d. Salaries
e. Cups
f. Utilities

Suppose that, on the basis of a nation’s production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9,000 pizzas. now consider the following statement: “through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus ‘move outside its production possibilities curve.’”