Suppose the fixed cost of a Christmas trees business is $7,000 and sunk

| November 24, 2016

a) Suppose the fixed cost of a Christmas trees business is $7,000 and sunk. The variable cost for each tree is $20. According to the forecast, the market price for Christmas trees is $25 each and the owner could sell 1000 trees at most each year. What will you advise the owner to do? Explain your answer. b) Suppose the estimated fixed cost of a Christmas trees business is $7,000 and not sunk. The estimated variable cost for each tree is $20. According to the forecast, the market price for Christmas trees is $25 each and the owner could sell 1000 trees at most each year. What will you advise the owner to do? Explain your answer.

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