Use the Information Below to Answer the Following Question

question 84

Multiple Choice

Use the information below to answer the following question.
Fact 14.3.1
Suppose that at one of the Talbots 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 Talbots 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.
-Refer to Fact 14.3.1. As a result of increased advertising, Talbots' markup

• A)decreases by $100.
• B)increases by $50.
• C)increases by $75.
• D)decreases by $60.
• E)decreases by an unknown amount.

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