Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 39

Multiple Choice

Use the information below to answer the following questions.
Sales Extraordinaire sells one particular photo frame. It estimates that it can sell as many frames as it produces. $\begin{array}{lr}\text { Sales price per unit } & \$ 6.00 \\\text { Variable cost per unit } & \$ 3.00 \\\text { Fixed costs per annum } & \$ 9,000\end{array}$
-Refer to the table above. Increasing the sales price to $8.00 and having a sales volume of 3,000 photo frames would result in:

• A)a profit of $6,000.
• B)a loss of $1,000.
• C)breaking even.
• D)a profit of $1,000.

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Definitions:

Network Effects

The phenomenon whereby increased numbers of people or participants improve the value of a good or service.

Simultaneous Consumption

A situation where a good or service can be consumed by more than one individual at the same time without reducing the quantity available to others.

Monopoly Power

The ability of a monopoly to set or influence prices within the market due to the lack of competitive pressures.

Net Social Benefits

The total benefits from an action or policy minus the total costs, considering both direct and indirect effects on society.