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The board foresees an outbreak of mad cow disease in the next financial quarter that can damage the market for the leather that makes the
The board foresees an outbreak of mad cow disease in the next financial quarter that can damage the market for the leather that makes the shoes. They foresee this outbreak causing the cost of making an order of one thousand shoes to quadruple. They dont expect the fixed costs to change.
- What would be the new expenses equation with the quadrupled shoe-making expenses?
- What would be the revenue equation with the quadrupled shoe-making expenses? (Hint: does this change? Why or why not?)
- What would be the new profit equation with the quadrupled shoe-making expenses?
- What would be the new break-even point for Nike? Justify each step of your solving process. Use the properties of equality in your justifications.
- Is this break-even point reasonable for the company? Explain your reasoning.
- What are the reasonable/logical values for the orders of thousands of shoes? Explain your reasoning.
- Is there a minimum number of orders that make sense in this situation? Why or why not? Represent this constraint using an inequality. Use the same variable you chose for orders of shoes for question #1.
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- Why doesnt it make sense for there to be a maximum number of orders based on the amount of information given in the situation?
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