Answer the Following Questions Using the Information Below:
Contrafic Lighting

question 206

Multiple Choice

Answer the following questions using the information below:
Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.
$$\begin{array} { l r r } & \text { Current } & \text { Projected } \\\text { Demand } & 75,000 \text { units } & 68,000 \text { units } \\\text { Selling price } & \$ 8.50 & \$ 9.25 \\\text { Incremental cost per unit } & \$ 4.80 & \$ 4.80\end{array}$$
-Would you recommend the 75-cent price increase?

• A) No, because demand decreased.
• B) No, because the selling price increases.
• C) Yes, because contribution margin per unit increases.
• D) Yes, because operating profits increase.

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Definitions:

Aggressive Tendencies

Inclinations or predispositions towards aggression or hostile behavior.

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The intake of beverages containing ethyl alcohol, which can have varying social, cultural, and personal effects on health and behavior.

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A socioeconomic condition characterized by a lack of financial resources necessary for basic living standards.