Acme Boats builds an 18 foot fishing boat, the "Bass Blaster". They recently discontinued the model but have detailed cost data indicating that the average costs of production were $8000 per boat. They have 5000 units left in inventory. At a recent marketing meeting the nephew of the CFO and the son-in-law of the marketing director (both important officials) had a heated argument about what to do with the unsold boats. The relevant quotes are as follows

Nephew: "We have got to clear the inventory. Even though we can't engage in price discrimination, we should just cut price to sell every one."

Son-in-law: "Are you INSANE? We can't charge less than average costs or we'll lose money."

• They may both be wrong. Explain.