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Author Question: The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. ... (Read 38 times)

leo leo

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on: Jul 6, 2018
The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. Overall, the shop is expected to make 32,000.
 
  Indicate whether the statement is true or false.

Question 2

Reducing the value of VC in a break-even analysis means that the business needs to sell fewer units to turn a profit.
 
  Indicate whether the statement is true or false.


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flannelavenger

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Reply #1 on: Jul 6, 2018
Answer to Question 1

Answer: FALSE
Explanation: Overall, the shop will make the sum of the probability products, or (0.40  80,000) + (0.60  25,000) = 32,000 + 15,000 = 47,000.

Answer to Question 2

Answer: TRUE
Explanation: A smaller VC results in a smaller TFC to (P - VC) ratio, which translates into fewer units sold to turn a profit.


leo leo

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Reply 2 on: Jul 6, 2018
Great answer, keep it coming :)

ricroger

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Reply 3 on: Yesterday
Gracias!

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