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You are hired as a manager for a local business making and selling chairs. The regular price is $30/unit, unit variable cost is $20/unit
You are hired as a manager for a local business making and selling chairs. The regular price is $30/unit, unit variable cost is $20/unit and fixed costs are $3,000 per month. Because of the recession, your sales have dropped to 200 units a month, so you're losing money. You're considering two options to increase sales: (1) reduce the price to $28/unit, or (2) run an advertising campaign, which will cost you $300 a month (treat it as an increase in FC), but keep the price at $30/unit. In both scenarios, you estimate that sales will increase by 20%, from 200 to 240 units per month. (Enter negative numbers with a minus sign. For example, enter negative one thousand as -1000.) Your total profit under status quo is $ Your total profit if doing the price cut is $ Your total profit if running an advertising campaign is $ Which option should you choose? price cut or C for advertising campaign. I For Blank 4 Enter A for doing nothing, B for
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