The following information is for X Company's two products, A and B:

Questions:

1. If X Company drops Product B because it shows a loss, what will be the effect on firm profits?

2. Assume that if X Company drops Product B, it can use the vacant space to increase sales of Product A by $36,700, but $3,000 of additional fixed costs will be incurred. This use of the vacant space will result in an increase in X Company's profits of