Question
A shoe store sells 250 pairs of sneakers per month at a per-unit price of $115. This is the price and quantity at which profits
A shoe store sells 250 pairs of sneakers per month at a per-unit price of $115. This is the price and quantity at which profits are maximized. The owner needs to pay a monthly rent of $5,500 whether the store stays open or not, and the rental contract cannot be canceled in the near future. The total variable cost (TVC) of the shoe store is $25,000 per month. What should the owner of the store do in the short run?
1. Decrease the price and sell more shoes
2. Sell fewer pairs of shoes
3. Close the store
4. Keep the store open even though negative profits are being made
5. Continue to produce even in the long run, as the store is making positive profits
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