Use the Information Below to Answer the Following Question(s)

question 14

Multiple Choice

Use the information below to answer the following question(s) .Block Island TV currently sells large televisions for $360.It has costs of $280.A competitor is bringing a new large television to market that will sell for $300.Management believes it must lower the price to $300 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 100,000 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)$225.00
• B)$227.27
• C)$246.68
• D)$280.00
• E)$270

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Definitions:

Profit-Maximizing

The process or strategy of adjusting production and sales to achieve the highest possible profit under given market conditions.

Level Of Production

The total quantity of goods or services produced by a company or an economy during a specific period.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices.

Price Taker

refers to a market participant who does not have the ability to influence prices and must accept the market price as given.