Block Island TV Currently Sells Large Televisions for $380

question 131

Multiple Choice

Block Island TV currently sells large televisions for $380. It has costs of $290. A competitor is bringing a new large television to market that will sell for $320. Management believes it must lower the price to $320 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Block Island TV sales are currently 120,000 televisions per year.
What is the target cost if the company wants to maintain its same income level, and marketing is correct (rounded to the nearest cent) ?

• A) $224.00
• B) $238.18
• C) $230.00
• D) $290.00

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Definitions:

Predictive Validity

The extent to which a score on a scale or test predicts future performance on a related outcome.

Independent Variable

In an experimental setup, the variable that is manipulated or changed to observe its effect on a dependent variable.

Dependent Variable

In an experimental setting, the variable that is being tested and measured, which is expected to change as a result of manipulations to the independent variable.

Dose-Response Relationship

The relationship between the quantity of a drug or other exposure and the magnitude of the effect it has on an organism.