Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics

Authors: David Colander

7th Edition

0073402869, 9780073402864

More Books

Students also viewed these Economics questions

Question

A14.5 What are key performance indicators (KPIs)? (Section 14.2.4)

Answered: 1 week ago