You've decided to sell sweatshirts for the upcoming game. You project that at a price of $33.24 per sweatshirt, you will be able to sell 120 shirts. In order to sell 260 sweatshirts, you would need to lower the price to $23.02 per sweatshirt. In order to produce the sweatshirts, it costs you $2.62 per sweatshirt on top of fixed costs of $340. What price gives a marginal profit of $0 per item. Assume linear demand.

You've decided to sell sweatshirts for the upcoming game. You project that at a price of $33.24 per sweatshirt, you will be able to sell 120 shirts. In order to sell 260 sweatshirts, you would need to lower the price to $23.02 per sweatshirt. In order to produce the sweatshirts, it costs you $2.62 per sweatshirt on top of fixed costs of $340. What price gives a marginal profit of $0 per item. Assume linear demand.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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Concept explainers

Explicit and Implicit Cost Analysis

The entire idea of the cost of production or production cost is applied corresponding or we can say that it is related to money cost. Money cost refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factors of production or factor services.

Question

You've decided to sell sweatshirts for the upcoming game. You project that at a price of

$33.24

per sweatshirt, you will be able to sell

120

shirts. In order to sell

260

sweatshirts, you would need to lower the price to

$23.02

per sweatshirt. In order to produce the sweatshirts, it costs you

$2.62

per sweatshirt on top of fixed costs of

$340.

What price gives a marginal profit of $0 per item.

Assume linear demand.

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