What is the effect of selling iPods for $20 when the cost is $10?

When iPods are sold for $20 and the cost to produce or purchase them is $10, the gross profit for each iPod sold can be calculated by subtracting the cost from the selling price. This results in a gross profit of $10 per unit sold ($20 - $10 = $10).

This increase in gross profit directly reflects the profitability of the sale, as gross profit indicates how much money is made before accounting for other operating expenses, taxes, and costs. Therefore, selling these iPods positively contributes to gross profit by that $10 amount.

In contrast, options that suggest a decrease in net income or changes in cash flow are not applicable here, as selling the product does not diminish any income. Similarly, stating that costs decrease fails to recognize the relationship between the selling price and the costs incurred in the sale. Overall, the correct answer emphasizes the relationship between revenue generated from sales and the costs associated with those sales, highlighting the increase in gross profit.