Adamo, a florist, operates retail stores in several shopping malls. The average selling price of an arrangement is $30 and the average cost of each sale is $18. A new mall is opening where Adamo wants to locate a store, but the location manager is not sure about the rent method to accept. The mall operator offers the following two options for its retail store rentals: 1. paying a fixed rent of $15,000 a month.
2. paying a base rent of $9,000 plus 10% of revenue received
3. paying a base rent of $4,800 plus 20% of revenue received up to a maximum rent of $25,000.

Required:
a. For each option (1, 2, and 3), compute the breakeven sales for that option and the monthly rent paid at break-even.
b. Show the sales levels at which each option is preferable.

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale

True tomato inc. makes organic ketchup. to promote its products, this firm decided to make bottles in the shape of tomatoes. to accomplish this, true tomato worked with its bottle manufacture to create a set of unique molds for its bottles. which of the following specialized assets does this example demonstrate? (a) site specificity (b) research specificity (c) physical-asset specificity (d) human-asset specificity

Aproduct has a demand of 4000 units per year. ordering cost is $20, and holding cost is $4 per unit per year. the cost-minimizing solution for this product is to order: ? a. 200 units per order. b. all 4000 units at one time. c. every 20 days. d. 10 times per year. e. none of the above