Arkansas Company Provided the Following Data for Its Only Product

question 6

Multiple Choice

Arkansas Company provided the following data for its only product: Assume there is excess capacity.There is a special order outstanding for 1,000 units at $40.00 per unit.If Arkansas Company accepts the special order,net income would ________.

• A)increase $40,000
• B)increase $11,250
• C)decrease $28,750
• D)decrease $10,000

---

Definitions:

Pure Monopolist

A market participant that has complete control over the market for a particular good or service, with no close substitutes.

Profit-Maximizing Quantity

The level of output at which a company can achieve the highest profit, where marginal cost is equal to marginal revenue.

Price Discriminate

The practice of selling the same product to different consumers at different prices based on what each is willing to pay.

Pure Monopolist

A single seller in a market who has complete control over the supply of a product and its price, with no close substitutes available.