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Fixed Costs, Variable Costs and Economies of Scale

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Can you please help me with the following scenario?

Your rich uncle died and left you $100k, which you decided to use for your own internet business. What business will you go into, and what will comprise your fixed and variable costs? How could your business take advantage of economies of scale?

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Solution Preview

Suggested business: $100,000 would be enough to start a modest Internet Café business

Target Market: Students, Office workers,

Suggested Services:

Online gaming
Surfing, chatting and emailing
Typing, CD/DVD burning services
Computer rental


Do not construct a building for your business. As a starter, rent a place. Find a location where rent is cheap.

The café must be near business establishments, offices and schools

Wireless Broadband Internet Connection:

Ideal internet connection should at least be 1 mbps. Speed greater than 1 mbps is preferred but costs higher.

Tables and ...

Solution Summary

This a suggested business venture involving start-up capital of $100,000 which specifies the fixed and variable costs including the concept of economies of scale.