subject: MANAGERIAL ECONOMICS

a) During a coffee-room debate among several young MBAs who had recently graduated, one of the young executives flatly stated, "The most this company can lose on its Somalian division is the amount it has invested (i.e., fixed costs)." Not everyone agreed with this statement.

i) In what sense is this statement correct? Explain.

ii) Under what circumstances could it be false? Explain