Answer to Question #273096 in Economics for syah

Question

ACME Coal paid $5,000 to lease a railcar from the Reading Railroad. Under the

terms of the lease, $1,000 of this payment is refundable if the railcar is returned within

two days of signing the lease.

a. Upon signing the lease and paying $5,000, how large are ACME’s fixed costs? Its

sunk costs?

b. One day after signing the lease, ACME realizes that it has no use for the railcar. A

farmer has a bumper crop of corn and has offered to sublease the railcar from ACME at

a price of $4,500. Should ACME accept the farmer’s offer

Answer 1

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