Nordic Avionics Makes Aircraft Instrumentation

question 2

Multiple Choice

Nordic Avionics makes aircraft instrumentation.Their basic navigation radio requires $80 in variable costs and $2000 per month in fixed costs.If they process the radio further to enhance its functionality,it will require an additional $25 per unit of variable costs plus an increase in fixed costs of $800 per month.The marketing manager believes that they would be able to boost their price of the radio from $260 to $300.Nordic sells 30 radios per month.If they decide to process further,what would the impact be on monthly operating profit?

• A) It would decrease by $3950.
• B) It would increase by $3950.
• C) It would increase by $1200.
• D) It would decrease by $350.

---

Definitions:

Inelastic Demand

A situation where the demand for a product or service remains relatively unchanged despite changes in its price.

Marginal Cost

The rise in aggregate expenditure resulting from the production of one more unit of a good or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Senior Discount

A reduction in the price of goods, services, or commodities offered to elderly individuals, typically those who are 65 or older.