Question
Chateau Lafite Rothschild, Chateau Margaux, and Chateau Latour are all famous wineries in the Bordeaux region of France. These are some of the most expensive
Chateau Lafite Rothschild, Chateau Margaux, and Chateau Latour are all famous wineries in the Bordeaux region of France. These are some of the most expensive red wines one can purchase, but in addition to thesePremier Crus, there are Bordeaux wines that can be purchased and enjoyed by mere mortals (and students!). To be labeled a "Bordeaux", the wine grapes must be grown in the Bordeaux region. The region is subdivided into a variety of subregions and there are many appellation d'origine controlee (AOC) designations within those regions, which primarily serve to officially identify the source of the grapes within the Bordeaux region. The classification system was originally developed at the request of Napoleon III and has rarely been expanded since 1855.
You and your sister are fortunate to have inherited a winery in the Bordeaux region, Chateau d'Ourson Bleu et Or, from your favorite uncle. The winery has been making profits since the late 1800s when it was founded.
Your winery currently operates on 20 acres, the average size of a vineyard in the region. You have a staff of 10 vineyard workers. You are debating either hiring one additional vineyard worker or renting a 5-acre plot of land from the vineyard owner next to yours (so the acreage would be 25 continuous acres), with the aim of expanding your business and profitability. Hiring an additional vineyard worker allows you to farm the land more intensively, resulting in an additional 45 barrels of wine while costing 9,000 in wages for the season. Alternately, renting the additional 5-acre plot results in an additional 100 barrels of wine, but rent for the 5-acre plot is not yet known because it has to be negotiated with the owner.
Your sister intuitively thinks that renting the 5-acre plot is the right business decision and wants to know your opinion. What do you recommend?
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