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Techno World currently sells laptops for $980. It has costs of $900. A competitor is bringing a new laptop to market that will sell for
Techno World currently sells laptops for $980. It has costs of $900. A competitor is bringing a new laptop to market that will sell for $960. Management believes it must lower the price to $960 to compete in the market for laptops. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Techno World sales are currently 100,000 laptops per year.
What is the change in operating income if marketing is correct and only the sales price is changed?
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