A company determines its yearly profits by deducting its operating expenses from its revenue for that year. Company X manufactures only widgets and gadgets. Company X's profits for this year are significantly higher than those for last year, although the company's operating expenses remained the same and the company sold the same number of widgets and gadgets as it did last year.
The statements above, if true, best support which of the following conclusions?
Stimulus :
Company X Profit = Revenue - Operating expenses
Profit Now > Profit Last
Pre-thinking:
So, there is no change in latter determining factor of Company X's Profit i.e, Operating expenses, and number of items sold is also the same.
What could be the deciding factor?? ....The price of each item this year
B. Company X has raised the price of its widgets or of its gadgets since last year. --> Correct, matches our pre-thinking
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