Consider the production cost information for Santiago's Salsa in Problem 1-1. The Company is currently producing and selling 325,000 jars of salsa annually. The jars sell for $5.00 each. The company is considering lowering the price to $4.60. Suppose this action will increase sales to 375,000 jars.
Required:
a. What is the incremental cost associated with producing an extra 50,000 jars of salsa?
b. What is the incremental revenue associated with the price reduction of $040 per jar?
c. Should Santiago's lower the price of its salsa?