Question
The firm XYZ Drive-Thru produces french fries as well as a related product: hamburgers. French fries have $10,200,000 in revenue, and hamburgers have $3,000,000 revenue.
The firm XYZ Drive-Thru produces french fries as well as a related product: hamburgers. French fries have $10,200,000 in revenue, and hamburgers have $3,000,000 revenue.
French fries cost the firm $11,100,000, and hamburgers cost the firm $1,750,000.
If the firm drops french fries, then revenue for hamburgers will decrease by 50% (just for the purposes of this problem, assume hamburger costs do NOT drop by 50%). The firm cannot avoid $290,000 of the cost of producing french fries.
Which of the following is TRUE?
Group of answer choices
It is $890,000 LESS profitable to drop the french fries product than to keep it.
It is $600,000 MORE profitable to drop the french fries product than to keep it.
It is $610,000 MORE profitable to drop the french fries product than to keep it.
It is $900,000 LESS profitable to drop the french fries product than to keep it.
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