Jemimas Casuals sells high-class ladies outfits. It has an outlet in Dixie Value Mall. Its marketing policy is to sell every outfit for a fixed price of $75. The normal mark-up is 50% of cost, so selling price is 150% of cost. The fixed costs consist of rent, salaries, etc. and are $5,000 per month. Jemimas Casuals is considering raising the price from $75 per outfit to $90 per outfit. It is currently selling 500 outfits per month. The price increase would cause volume to drop by 10%. Jemimas Casuals should __________.

a.

increase the price because operating profit will increase by $5,000

b.

not increase the price because operating profit will be reduced

c.

increase the price because operating profit will increase by $5,500

d.

none of the above

e.

increase the price because operating profit will increase by $3,000