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A group of 30 Lincoln students are returning from LakeTahoe on a
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A group of 30 Lincoln students are returning from LakeTahoe on a ski trip.They stop offat a restaurant outside of Sacramento.This restaurant has a capacity of 800 meals per day.  It currently serves 750 meals per day.

The dailyfixed costs are \$1,200 per day.The main meal is a Caesar salad that sells for \$9; the unit variable cost is \$5 per salad.The student leader of the bus trip offers to bring the students into the restaurant, if the total payment for

30 meals could be \$180.   The restaurant owner refuses because he says that he would lose on average \$0.60 per meal.

Please comment on the restaurant owner's reasoning. Is he correct?  What would you show the restaurant owner to change his mind?

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This question was answered on: Feb 21, 2020

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