Premium Cutlery Inc (PCI) is a specialist producer of a single product - environmentally friendly disposable cutlery. It has the capacity to manufacture X boxes of disposable cutlery a month. The selling price for a box is $Y. This is the price that PCI charges its regular customers who are the large retailers in the domestic market. The variable cost PCI incurs to produce each box is $Z. PCI also incurs significant amounts of fixed costs which are not expected to change over the next 12 months.

It is now the last day of the current month.

Towards the end of the day, PCI receives a phone call from GW, owner of a chain of restaurants, who is looking for a one-off supplier of disposable cutlery. GW requires these items to be made and supplied in the following month. GW does not know what PCI's regular selling price per box is (i.e., $Y is unknown to GW). It needs a decision from PCI on the same day.

PCI has sufficient capacity next month to fulfill GWs order.

Which of the following factors would likely cause PCI to accept a lower price per unit from GW (all else being equal)? Consider quantitative factors only.

1. A higher X (i.e., PCIs monthly capacity)

2. A lower $Y (i.e., PCIs regular selling price)

3. A lower $Z (i.e., PCIs variable cost per box)

Group of answer choices

Statement 1 only

Statement 2 only

Statement 3 only

Statement 2 and 3 only

Statement 1, 2 and 3