Question

Katie’s Quilts is a small retailer of quilts and other bed linen products. Katie currently purchases quilts from a large producer for $ 100 each and sells them in her store at a price that does not change with the number of quilts that she sells. Katie is considering vertically integrating by making her own quilts. If the fixed cost of vertically integrating is $ 10,000 and she can produce quilts at $ 50 per quilt, her total cost of producing quilts, q, herself is C = 10,000 + 50q. How many quilts does Katie need to sell for vertical integration to be a profitable decision?



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  • CreatedNovember 13, 2014
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