The Following Information Is Provided for Two Products Assume the Products Will Be Sold in a Store Where

question 100

Multiple Choice

The following information is provided for two products: $\begin{array}{|l|c|c|}\hline & \text { Product } \mathrm{X} & \text { Product Y } \\\hline \text { Selling price per unit } & \$ 35 & \$ 25 \\\hline \text { Variable cost per unit } & 20 & 15 \\\hline\end{array}$ Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products.Expected sales for Product X are 6,000 units,and expected sales for Product Y are 8,000 units.Which product should be sold and why?

• A) Product Y should be sold solely because the expected demand for this product is greater than the expected demand for Product X.
• B) Product Y should be sold because sales of this product will provide a greater profit.
• C) Product X should be sold because it provides a greater contribution margin per unit.
• D) Product X should be sold because sales of this product will provide a greater profit.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, determining the cost of borrowing money or the return on savings and investments.

Money Market

A segment of the financial market in which financial instruments with high liquidity and short maturities are traded.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at various price levels, typically downward sloping.

Recession

A short-lived economic contraction, featuring a reduction in both trade and industrial activities, conventionally confirmed by observing a GDP decrease in two back-to-back quarters.