NEKP IncSells Two Versions of Its Product, Standard and Deluxe

question 11

Multiple Choice

NEKP Inc.sells two versions of its product, standard and deluxe.The standard model has a 15 percent profit margin and the deluxe model has a 17 percent profit margin.The standard model has a 30 percent contribution margin and the deluxe has a 23 percent contribution margin.If other factors are equal, which product should NEKP emphasize to its customers?

• A)The standard model
• B)The deluxe model
• C)Selling either results in the same additional income for the company
• D)Not enough information is given

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Definitions:

Industry Supply Curve

A graphical representation showing the total quantity of a good that producers in an industry are willing to supply at various prices.

Individual Supply Curves

Graphical representations that show the relationship between the price of a good and the quantity of the good that a single producer is willing to supply.

Short-run

A period of time in which at least one input is fixed and cannot be changed, affecting the capacity to adjust production levels.

Long-run Equilibrium

A state in which all factors of production and inputs can be fully adjusted, and there are no fixed variables, resulting in market supply equalling market demand.