Flash City Inc. manufactures small flash drives 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.

Current Projected

Demand 79,000 units 72,000 units

Selling price $8.50 $9.25

Incremental cost per unit $5.80 $5.80

If the price increase is implemented, operating profit is projected to ________.

	1.	increase by $35,100
	2.	decrease by $5,250
	3.	increase by $5,250
	4.	decrease by $7,000