6 May, 05:46

# Javier is the business manager at his college. In his role, Javier makes a lot of business decisions. Javier has installed a vending machine in a dorm for soft drinks. The machine rents for \$200 a month and the electrical use is minimal. Javier buys soft drinks for \$.25 each and charges \$.75 each from the vending machine. Currently, the machine has a sales volume of 400 cans a month. Javier thinks raising the price to \$.80 will not have any effect on sales. What impact would raising the price to \$.80 have on overall profit or loss?A. Profit of \$100B. Profit of \$200C. Profit of \$320D. Profit of \$20

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1. 6 May, 05:52
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D. Profit of \$20

Explanation:

Current profit: Revenue - Cost = 400*0.75 - (400*0.25 + 200) = 0 (breaks even)

Because raising price will not have any effect on sales, the sales volume would still be 400

The price is raised from \$.75 to \$.80

The new profit would be 400 * 0.80 - (400*0.25 + 200) = \$20

That would also be the additional profit (20 - 0 = 20)