Answer the Following Questions Using the Information Below

question 14

Multiple Choice

Answer the following questions using the information below:
Perth TV currently sells flat screen televisions for $180.It has costs of $140.A competitor is bringing a new flat screen television to market that will sell for $150.Perth believes it must lower the price of its television sets to $150 to remain competitive.Marketing believes that the new price will cause sales to increase by 10%,even with the new competitor in the market.Perth's sales are currently 100 000 televisions per year.
-What is the change in operating profit if marketing is correct and only the sales price is changed?

• A)$(1 100 000)
• B)$1 100 000
• C)$300 000
• D)$(2 900 000)

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Definitions:

Free Will

The power of acting without the constraint of necessity or fate; the ability to act at one's own discretion.

Status Quo Bias

The preference for the current state of affairs, where changes are perceived as losses rather than gains, leading to resistance to change.

Temporal Discounting

The devaluation of future rewards or outcomes in favor of immediate benefits, reflecting an individual's preference for short-term gratification.

Certainty Effect

The tendency for people to give greater weight to outcomes that are certain, compared to outcomes that are only probable.