2M Inc, manufactures N95 masks. In the wake of the pandemic, 2M anticipated a surge in demand and signed a purchase commitment on June 30, 2020 that requires 2M to purchase 1,000 feet of polypropylene (raw materials) at $10 per feet on March 31, 2021. On December 31, 2020 (year-end), prevailing market price per feet was $8 due to lower demand than expected.

By how much did this purchase commitment affect net income of 2020? (ignore taxes)

Group of answer choices

-Decrease by $2,000

-No effect

-Increase by $2,000

-None of other answer choices is correct