Link wants to make$100,000after tax on his newventureinto selling pizza-on-a-stick, using a push along cart at the
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Question:
Link wants to make$100,000after tax on his newventureinto selling pizza-on-a-stick, using a "push along" cart at the beach. For each pizza-on-a-stick, he incurs raw material costs of$5 and sells them for $10. He pays a salary to his friend Zelda, who operates the cart for $50,000. If he buys the cart himself, he will incur fixed expenses of $20,000. Or, he can rent the cart and pay $1 to the cart supplier each time he sells a pizza stick. What is his point of indifference? That is, at what volume of pizza sticks is he indifferent about renting or buying the cart?
Expert Answer:
Links Indifference Point Lets analyze the costs for buying and renting the cart to find the point wh... View the full answer
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