Newell Company Presently Has Three Product Lines: Paper, Stamps, and Printer

question 68

Multiple Choice

Newell Company presently has three product lines: paper, stamps, and printer ink. The company is considering adding a new line of pens. Market research shows the following expected revenues and costs if the pen line were added: If pens are added as a product line, it is expected that the other lines will have a decrease in contribution margin of $7,000. Given this information, if Newell adds the pen line, net income would increase by:

• A) $16,000
• B) $14,000
• C) $7,000
• D) $0

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Definitions:

Demand Curves

A graphical representation that shows the relationship between the price of a good and the quantity demanded by consumers.

World Price

The worldwide market price of a good or service, affected by the balance of global demand and supply.

Nontariff Barrier

Measures other than tariffs that countries use to control the amount of trade across their borders, including quotas, embargoes, sanctions, and other restrictions.

Import

The act of bringing goods or services into a country from abroad for sale.