1. Erosion costs. Fat Tire Bicycle Company currently sells 35,000 bicycles per year. The current bike is a standardballoon-tire bike selling for $100, with a production and shipping cost of $35. The company is thinking of introducing anoff-road bike with a projected selling price of $370 and a production and shipping cost of $250. The projected annual sales for theoff-road bike are 17,000. The company will lose sales infat-tire bikes of 9,500 units per year if it introduces the newbike, however. - What is the erosion cost from the newbike? Should Fat Tire start producing theoff-road bike?

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