Imagine that a friend asks you whether or not you should start a washing machine business. For this, it provides you with the following information which is 100% accurate.
Price of washing machines: $300,000
Unit variable cost of washing machines: $150,000
Annual fixed cost: $20,000,000
Furthermore, it is known that the annual sale of washing machines will be equal to 100 units.
Based on the above information: Do you recommend your friend carry out the business?
Yes, since there are positive utilities
No, since the profits are negative