1. If Priceline.com increases its advertising expenses by 30 percent while keeping its price and variable costs the same, does that mean the company’s breakeven point will increase 30 percent? Show this calculation for a hypothetical firm.
Why is it important to be able to work out a breakeven analysis?
2. There is always a trade off in determining how much inventory should be kept on hand. How do you see the technological and transportation changes affecting inventory control into the future?