Use the Information Below to Answer the Following Question(s)

question 29

Multiple Choice

Use the information below to answer the following question(s) :
Accessibility Products Company has three models: D, E, and F. The following information is available:

Accessibility Products Company is thinking of dropping model F because it is reporting an operating loss. All fixed expenses are unavoidable.
-Assume Accessibility Products Company is able to increase the sale price of product F to $33,000 with no change in volume of units sold and no change in variable costs or fixed costs. What affect will this have on operating income?

• A) Increase $29,000
• B) Increase $4,000
• C) Decrease $29,000
• D) Decrease $4,000

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Definitions:

Sensitivity

The degree to which something is affected by changes in external factors, often used in contexts like financial analyses, project planning, or scientific measurements.

Marginal Utility

This concept describes the additional satisfaction or utility a consumer receives from consuming one more unit of a good or service.

Total Utility

The complete satisfaction or benefit a consumer receives from consuming a certain amount of goods or services.

Diminishing Marginal Utility

A common economic concept stating that as a person consumes more of a product, the satisfaction (utility) gained from each additional unit decreases.