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Suppose That at One of the Talbot's Shops, Marginal Cost

question 159

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Suppose that at one of the Talbot's shops, marginal cost of a coat is constant at $150, and total fixed cost is $3,000 a day. The shop maximizes its profit by selling 15 coats a day at $500 per coat. Then the shops nearby increase their advertising. The Talbot shop responds by spending $1,500 a day more on advertising its coats. As a result, its profit-maximizing number of coats sold increases to 25 a day at $400 per coat.
-In the scenario above, as a result of increased advertising, Talbot's markup:


Definitions:

Ion

A charged atom.

Electron

One of the three major parts of an atom. The electron carries a negative charge.

Proton

One of the three principal parts of an atom. The proton has a positive charge.

Ionization Potential

The amount of voltage or potential that must be applied to cause ionization of a gas.

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