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Question: You own a firm with a single new product that is about to be introduced to the public for the first time. Your marketing analysis suggests that the demand for this product could be anywhere between 500,000 units and 5,000,000 units. Given such a wide range, discuss the safest cost structure alternative for your firm.

You are involved in the planning process for a firm that is expected to have a large increase in sales for the next year. Which type of firm would benefit the most from that sales increase: a firm with low fixed costs and high variable costs or a firm with high fixed costs and low variable costs?

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