Comics Plus Has a Current Production Level of 200,000 Comics

question 65

Multiple Choice

Comics Plus has a current production level of 200,000 comics per month.Unit costs at this level are: Current monthly sales are 180,000 units.Printers Ltd.has contacted Comics Plus about purchasing 15,000 units at $1.00 each.Current sales would not be affected by the special order, and variable marketing/distributing costs would not be incurred on the special order.What is Comics Plus' change in profits if the order is accepted?

• A)$6,000 increase
• B)$6,000 decrease
• C)$7,500 increase
• D)$9,000 increase
• E)$3,000 increase

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Definitions:

Normal Profit

The minimum profit necessary for a company to remain competitive in the market, equating to the opportunity cost of the resources employed.

Normal Profit

The minimum level of profit necessary for a company to remain competitive in the market, often considered the break-even point.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one more unit of a good or service. It is a critical concept in economics for decision-making regarding production levels.

Purely Competitive Market

A market structure characterized by many buyers and sellers, all of whom are selling a homogeneous product, with no single buyer or seller able to influence the market price.