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Strategic Business Expansion
A small coffee shop owner has saved $20,000 for business expansion. They are considering three distinct projects:
- Renovate the existing shop: Use the entire $20,000 to upgrade the interior, which is expected to increase customer traffic by 10%. This project would require closing the shop for two weeks.
- Launch a delivery service: Spend $15,000 on a delivery vehicle and marketing. This would not require closing the shop.
- Open a second, smaller kiosk location: This would cost the full $20,000 and require the owner's full-time presence for the first month to manage the new location, meaning they cannot manage the original shop during that time.
Evaluate these three projects in the context of economic decision-making. In your response, identify which projects are mutually exclusive and explain why, considering all constraints. Then, discuss how this situation forces the owner to consider the trade-offs and potential returns of each choice.
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