Charlie Shine Has Written a Self-Improvement Book Charlie Shine Is Currently Selling 5,200 Books Per Year

question 43

Multiple Choice

Charlie Shine has written a self-improvement book.The following are its pricing and cost details: $$\begin{array} { l c } \text { Selling price } & \$ 18.00 \text { per book } \\\text { Variable cost per unit: } & \\\text { Production } & \$ 3.50 \\\text { Selling \& administrative } & 1.90 \\\text { Fixed costs: } & \\\text { Production } & \$ 33,600 \text { per year } \\\text { Selling \& administrative } & 15,540 \text { per year }\end{array}$$ Charlie Shine is currently selling 5,200 books per year.What impact would a 22% increase in sales have on profit?

• A)Profit would increase by 22%.
• B)Profit would increase by 100%.
• C)Profit would increase by $20,592.
• D)Profit would increase by $14,414.

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Definitions:

Negative Externalities

Costs suffered by a third party due to an economic transaction or activity for which they are not compensated.

Positive Externalities

Benefits that are experienced by third-parties or the society at large as a result of an economic transaction or activity, without those third parties directly paying for the benefits received.

Efficient Output Levels

Points of production where the economy can no longer increase the production of one good without decreasing the production of another good, achieving an optimal distribution of resources.

Socially Optimal

A state or outcome that is considered the most efficient and beneficial for society as a whole, often in terms of resource allocation or welfare.