Answer the Following Question(s)using the Information Below

question 110

Multiple Choice

Answer the following question(s) using the information below.Welch Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers.Welch Manufacturing has excess capacity.The following per unit data apply for sales to regular customers:

-What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for $180 a unit by Welch?

• A)$70,000 increase in operating profits
• B)$10,000 increase in operating profits
• C)$10,000 decrease in operating profits
• D)$75,000 decrease in operating profits
• E)$40,000 increase in operating profits

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Definitions:

Constant Slope

A line on a graph that has the same steepness throughout, indicating a uniform rate of change.

Price Elasticity

Price elasticity measures how the quantity demanded or supplied of a good changes in response to a change in its price.

Linear Demand

A type of demand relationship where changes in price lead to direct, proportional changes in quantity demanded.

Price Elastic

An assessment of the influence that price changes have on the consumer's purchasing volume of a good.