The law of increasing opportunity costs states that multiple choice if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so. the sum of the costs of producing a particular good cannot rise above the current market price of that good. if the sum of the costs of producing a particular good rises by a specified percentage, the price of that good must rise by a greater relative amount. if the prices of all the resources used to produce goods increase, the cost of producing any particular good will increase at the same rate.

P8-4b dropping unfavorable division based on the following analysis of last year's operations of groves, inc., a financial vice president of the company believes that the firm's total net income could be increased by $160,000 if its design division were discontinued. (amounts are given in the thousands of dollars.) required provide answers for each of the following independent situations: a. assuming that total fixed costs and expenses would not be affected by discontinuing the design division, prepare an analysis showing why you agree or disagree with the vice president. b. assume that the discontinuance of the design division will enable the company to avoid 30% of the fixed portion of cost of services and 40% of the fixed operating expenses allocated to the design division. calculate the resulting effect on net income. c. assume that in addition to the cost avoidance in requirement (b), the capacity released by discontinuance of the design division can be used to provide 6,000 new services that would have a variable cost per service of $60 and would require additional fixed costs totaling $68,000. at what unit price must the new service be sold if groves is to increase its total net income by $180,000?