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Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $94 for such a widget and that 54,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $58.
Problem 1: At a price of $84, Summit's market research indicates that it can sell 64,000 units per year. Assuming Summit can reach its new target cost, how will Summit's profit at the $84 price compare to what it would have earned in the absence of the competitor's product?
A. Profit will be $60,000 higher.B. Profit will be $60,000 lower.C. Profit will be unaffected if Summit can reach the revised target cost.D. Profit will be $64,000 higher.
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