ENVIRON 157 Lecture 6: PUB POL 461 Week 2 Lect 2

2- 43 Joe%u2019s Pub, Cost- Volume- Profit Analysis in a SmallBusiness Joe Bell recently opened Joe%u2019s Pub in the UniversityDistrict. Because of licensing restrictions, the only liquor he cansell is beer. The average price of beer at Joe%u2019s Pub is $ 3.00per glass, and each glass costs Joe an average of $ 2.20. Joe hashired a bartender and waiter at $ 3,000 and $ 2,000 per month,respectively. His rent, utilities, and other fixed operating costsare $ 5,000 per month.

Joe isconsidering selling hamburgers during the lunch hour. He feels thatthis will increase his daytime business, which is currently quitesmall. It will also allow him to be more competitive with otherlocal bars that offer a wider variety of food anddrinks.

Joe wouldlike to sell the hamburgers for $ 1.25 each in order to beattractive to customers. Joe will buy buns for $ 1.20 a dozen andground beef for $ 2.80 per pound. Each pound of ground beef willmake seven hamburgers. Other ingredients will cost an average of $.20 per hamburger. Joe will also need to hire a part- time cook at $1,200 per month. Other additional fixed costs will run about $ 360a month.

1. IfJoe sells only beer, how many glasses of beer does he have to selleach month to make a monthly profit of $ 2,000?

2. IfJoe sells only beer, how many glasses of beer does he have to selleach month to make a monthly profit of 5% of sales?

3.Suppose Joe decides to add hamburgers to his menu. How manyhamburgers does he need to sell to break even on the hamburgers?Assume that there is no effect on beer sales.

4. Themain reason Joe wanted to add hamburgers was to attract morecustomers. Suppose that 2,000 extra customers per month came forlunch because of the availability of hamburgers and that eachbought an average of 1.5 beers. Compute the added profit ( or loss)generated by these extra customers.

5. Joewas not sure how many new customers would be attracted by thehamburgers. Give Joe some advice about how many new customers wouldbe needed to just break even on the new business if each newcustomer bought one hamburger and one beer. Include an assessmentof the consequences of volume falling below or above this break-even point.

6. Joecould offer a higher quality hamburger if he spends 50% more on theingredients. He could then charge $ 2.00 for them. Explain how Joecould determine whether the higher quality ham-burgers would bemore profitable than the regular hamburgers.

1.) You are studying a particular type of cancer. You observe that the cells are expressing higher than normal levels of the activated version of the G protein Ras (ie, they contain more Ras-GTP than normal).

a.(2 pts) Further study shows that the one of the Ras genes has been mutated, would you classify this as the mutation of a tumor-suppressor gene or an oncogene?

b.(2 pts) Given your knowledge of the regulation of G proteins, suggest an explanation for how this mutant Ras protein results in more Ras-GTP than normal.

c.(2 pts) In a different cancer you also observe an increase in the activated form of Ras, however, in this case, the mutation has occurred in both copies of a gene encoding a protein that normally interacts with Ras. The mutant forms of the protein no longer interact with Ras and this leads to inappropriate growth. Since the mutation leads to cancer, would this loss of function be an example of an oncogene or a tumor-suppressor? Can you suggest a function for this protein?