Superior Products, Inc. is interested in producing and selling a deluxe electric razor. Market research indicates that customers would be willing to pay $80 for such a razor and that 40,000 units could be sold each year at this price. The current cost to produce the razor is estimated to be $68.

At a price of $75, Superior's market research indicates that it can sell 42,000 units per year. Assuming Superior can reach its new target cost, how will Superior's profit at the $75 price compare to what it would have earned in the absence of the competitor's product?

Practice Question 17 options:

a)Profit will be $10,000 smaller.

b)Profit will be $10,000 greater.

c)None of the alternatives are correct

d)Profit will be unaffected if Superior can reach the revised target cost.