Answer the Following Questions Using the Information Below

question 28

Multiple Choice

Answer the following questions using the information below:
Frank's Computer Monitors, Inc., currently sells 17" monitors for $270. It has costs of $210. A competitor is bringing a new 17" monitor to market that will sell for $225. Management believes it must lower the price to $225 to compete in the market for 17" monitors. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Frank's sales are currently 10,000 monitors per year.
-Action Toys has a new video game cassette for the upcoming holiday season. It is trying to determine the target cost for the game if the selling price per unit will be set at $60, the going price for video games, and the firm wants to earn a target operating income of 12% of sales. What will be the target cost per unit for the new game?

• A)$48.00
• B)$52.80
• C)$53.57
• D)$67.20

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Definitions:

Government Intervention

Actions taken by a government to influence or regulate the economy or specific industries, often to correct market failures or promote social welfare.

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market equilibrium price.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and other forms of involvement.

Market Efficiency

A condition in which all available information is fully reflected in asset prices, making it impossible to consistently achieve higher returns than the overall market.