Question
Use the following information to answer the next THREE questions: Consider a profit-maximizing local monopoly clothing store that sells high-quality leather winter jackets.It expects to
Use the following information to answer the next THREE questions:
Consider a profit-maximizing local monopoly clothing store that sells high-quality leather winter jackets.It expects to face a market demand function for its winter jackets given by Q=(900-P)/3, where P is the price per jacket and Q is the number of jackets.The marginal cost of production is MC=90. With these expectations in mind the store goes ahead and charges its customers the price that maximizes its profits.However, towards the end-of-winter season it realizes that demand is much less than anticipated, only Q=(900-P)/9.Knowing that not all its winter jackets will be sold by end of season at the current price, the store decides to offer an end-of-winter season sale. (Note: for the following three questions, assume the store owner can sell fractions of jackets, rounding to two decimal places.)
13. What sale price should the store charge per jacket?
A.$160.31
B.$247.50
C.$180.68
D.$400.25
E.$550.85
14. The clothing store is also considering a second sale 'final clearance' price.What final clearance price should the store charge per jacket?
A.$123.75
B.$155.45
C.$111.28
D.$142.86
E.$103.60
15. How many jackets will remain unsold after the final clearance sale?
A.5.83
B.48.75
C.31.42
D.0
E.1.3
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