2. Light1 has an idea of creating a shop that sells letters. For selling the letters he will have to buy paper and ink at about $0.2 per letter and will take about 1 min per letter. The time that he takes writing the letters, could be spent driving a taxi for $18 an hour. He will also have to rent a sophisticated printer for 29, 000 a month. He hires his friend Ryuk for a one time fee of $10, 000 to perform market research and finds that letters can be sold at $1.5 each, and total demand is about 30, 000 letters a month . a) What are the fixed costs of doing his start up? b) What are the variable costs? c) After doing the market research but before deciding to operate or not. Is there any sunk cost? d) After talking to Ryuk, will Light establish his letter firm? Unexpectedly, in the month of November, after paying for the rent of the printer, a review for Light's letters is revealed, that classified the letters as deathly, therefore the expected demand for November falls to just 2 letters that can be sold at $2.5. e) Will Light sell the two letters or will he decide to close his shop for November? f) If the fall in demand is permanent and demand will be 2 letters a month forever for $2.5. Will Light close his business in December?

2. Light1 has an idea of creating a shop that sells letters. For selling the letters he will have to buy paper and ink at about $0.2 per letter and will take about 1 min per letter. The time that he takes writing the letters, could be spent driving a taxi for $18 an hour. He will also have to rent a sophisticated printer for 29,000 a month. He hires his friend Ryuk for a one time fee of $10, 000 to perform market research and nds that letters can be sold at $1.5 each, and total demand is about 30, 000 letters a month . a) What are the xed costs of doing his start up? b ) What are the variable costs? c) After doing the market research but before deciding to operate or not. Is there any sunh cost? ) d After talking to Rynh, will Light establish his letter firm? Unexpectedly, in the month of November, after paying for the rent of the printer, a review for Light's letters is revealed, that classied the letters as deathly, therefore the expected demand for November falls to just 2 letters that can be sold at $2.5. e) Will Light sell the two letters or will he decide to close his shop for November? f) If the fall in demand is permanent and demand will be 2 letters a month forever for $2.5. Will Light close his business in December