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Suppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the firm's shops, total fixed cost is $500 a day.
Suppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the
firm's shops, total fixed cost is $500 a day. The profit maximizing number of
jackets sold in this shop is 30 a day. Then the shops nearby from other retailers
start advertising their jackets. The Tommy Hilfiger shop decides to spend $1,000 a
day advertising its jackets, and its profit maximizing number of jackets sold jumps
to 60 a day.
What is the shop's average total cost of a jacket sold before the advertising begins?
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