# GMAT Ratios Lesson Video #3 | Fixed Cost, Variable Cost | 650 Level Practice Question | Word Problem - Videos

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GMAT Quant Ratios Lesson Video

Concept | Fixed cost and variable cost

What is fixed cost? What is variable cost? How to frame equations when a GMAT problem solving question mentions that part of the costs are fixed and part of the costs are variable.

How to solve these set of linear equations? These are classic word problems and usually of medium level difficulty. 650 level question in the GMAT.

Question
The expenses of a B School Coffee Shop were partly fixed and partly variable. If the coffee shop served 20 students, the cost per student per day was \$8. If the number of students increased by 50%, the cost per student per day dropped to \$7. What will be the cost per student per day if 50 students were served?

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