1. Identify which of the following are extent decisions.
a. Decide whether to expand an existing product into a new region.
b. What discount should be given on products during the upcoming holiday sale?
c. Should the advertising budget be changed for the upcoming year?
d. Should you develop a new product for an existing product line?
2. Your insurance firm processes claims through its newer, larger high-tech facility and its older, smaller low-tech facility. Each month, the high-tech facility handles 10,000 claims, incurs $100,000 in fixed costs and $100,000 in variable costs. Each month, the low-tech facility handles 2,000 claims, incurs $16,000 in fixed costs and $24,000 in variable costs. If you anticipate a decrease in the number of claims, where will you lay off workers?
3. George’s T-Shirt shop products 5,000 custom-printed T-shirts per month. George’s fixed costs are $15,000 per month. The marginal cost per T-shirt is a constant $4. What is his break-even price? What would be George’s break-even price if he were to sell 50% more?