Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Quick Change and Fast Change are competing oil change businesses. Both companies have 5,000 customers. The price of an oil change at both companies is
Quick Change and Fast Change are competing oil change businesses. Both companies have 5,000 customers. The price of an oil change at both companies is $20. Quick Change pays its employees on a salary basis, and its salary expense is $40,000. Fast Change pays its employees $8 per customer served. Suppose Fast Change is able to lure 1,000 customers from Quick Change by lowering its price to $18 per vehicle. Thus, Fast Change will have 6,000 customers and Quick Change will have only 4,000 customers. Select the correct statement from the following. Select one: O A. Quick Change's profit will increase while Fast Change's profit will fall. o B. Profits will decline for both Quick Change and Fast Change. C. Fast Change's profit will stay the same but it will still earn a higher profit than Quick Change. o D. Quick Change's profit will remain the same while Fast Change's profit will decrease
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started