Imagine you can make a $75 retail Christmas wreath in two hours at a variable cost of $25 per wreath and a fixed cost of $800. Marketing consists of a booth at the local craft fair (rent: $100 for the month before Christmas), where five other competitors already sell wreaths nearly identical to yours in cost and quality. Annually they sell 300 wreaths, so if you join in, your target share would be about 50 wreaths.
Should you sell your product?
If one competitor lands the coveted spot by the door, capturing half the market, what is your decision?