You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $700,000 per month, and you have contractual labour obligations of $1,250,000 per month that you can’t get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.1 per paper.a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the average fixed cost per paper and to the marginal cost per paper?b. What happens to the minimum amount that you must charge to break even on these costs?
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