Use the Information for the Question(s)below

question 56

Multiple Choice

Use the information for the question(s) below.
Glucose Scan Incorporated (GSI) currently sells its latest glucose monitor,the Glucoscan 3000,to diabetic patients for $129.GSI plans on lowering their price next year to $99 per unit.The cost of goods sold for each Glucoscan unit is $50,and GSI expects to sell 100,000 units over the next year.
-Suppose that if GSI drops the price on the Glucoscan 3000 immediately,it can increase sales over the next year by 30% to 130,000 units.The incremental impact of this price drop on the firm's EBIT is closest to:

• A)a decline of $1.5 million.
• B)an increase of $1.5 million.
• C)a decline of $2.4 million.
• D)an increase of $2.4 million.

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Definitions:

Pre-Eclampsia

A life-threatening disease that can afflict pregnant women. It is characterized by high blood pressure.

Prenatal Care

Medical and healthcare provided to expectant mothers during pregnancy to ensure the health of both the mother and the fetus.

Rubella

A viral infection that can cause retardation and heart disease in the embryo. Also called German measles.

Birth Defects

Physical or biochemical abnormalities present at birth that can cause physical or mental disability.