4.2 Anthony sells cakes, tiramisu, and other desserts. He currently purchases tiramisu from a pastry store for
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4.2 Anthony sells cakes, tiramisu, and other desserts.
He currently purchases tiramisu from a pastry store for €4 each and sells them at his store for a price that does not change with the number of tiramisus that he sells. Anthony is considering vertically integrating by making his own tiramisu. If the fixed cost of vertically integrating is €500 and he can produce tiramisu at €2 per serving, his total cost of producing tiramisu, q, himself is C = 500 + 2q. How many tiramisus does Anthony need to sell for vertical integration to be a profitable decision?
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Managerial Economics And Strategy
ISBN: 9780135640944
2nd Global Edition
Authors: Jeffrey M. Perloff, James A. Brander
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