Economics Class Help Please ;)

Last year, your firm spent $50,000 for a marketing study to see how its product would be perceived in a neighboring state. The study estimated that sales in the neighboring state would be $100,000 if your company optimally spent $40,000 in advertising targeting this new location. The increased sales of $100,000 would require your firm to spend an extra $20,000 on manufacturing.







Fill in following table:







Enter Stay out



(Sell in neighboring state) (Do not sell in neighboring state)







Benefit: $ $



Opportunity Costs $ $



Sunk Costs $ $



Net Benefits $ $















Your firm should:



a. stay out of the neighboring state because the benefit is less than the total cost.



b. stay out of the neighboring state because the benefit is less than the opportunity cost.



c. stay out of the neighboring state because the benefit is less than the sunk cost.



d. expand to the neighboring state because the benefit exceeds the total cost.



e. expand to the neighboring state because the benefit exceeds the opportunity cost.



f. expand to the neighboring state because the benefit exceeds the sunk cost.