Ernie Shavers, Inc. manufactures electric shavers and is considering decreasingthe price by $3 a unit for the coming year. With a $3 price decrease, the unit demand is expected toincrease by 25%, and a high volume materials discount is expected to decrease the variable costs per unit by $1 per unit.

	currently
demand	10,000 units
selling price	$51
variable costs per unit	$45

would you recommend $3 price decrease?

a. yes, because countribution margin per unit increases

b. no, the selling price decreases

c. no, operating income decreases

d. yes, demand increases