The postal service of St. Vincent, as island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets…

The postal service of St. Vincent, as island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets to stamp collectors. The postal service purchases the souvenir sheets from a supplier for $0.80 each. St. Vincent has been selling the souvenir sheets for $8.00 each and ordinarily sells about 80,000 units.

To test the market, the postal service recently priced a new souvenir sheet at $ 7.00 and sales increased to 94,400 units. The traceable fixed expenses are $ 350,000 per year.

Which price should they charge and what profit would they earn in this case?

A) $7; $235,280

B) $7; $197,750

C) $8; $197,750

D) $8; $235,280

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