Last Year, Jasmine Taylor Opened a Gift Store in a Busy

question 81

Essay

Last year, Jasmine Taylor opened a gift store in a busy shopping center. She spent a lot on advertising and attracted many customers into the store, but very few customers made purchases and sales were declining. Jasmine paid attention to questions and requests made by customers and determined that they often requested items that were within the scope of her business but that she did not carry. When she offered to order items for her customers, delivery was usually too late and, again, sales were lost. What measures should Jasmine take to improve her business?

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Definitions:

Average Product

The output per unit of input, for example, the average quantity of product produced per worker or per machine.

Marginal Product

The additional output that results from using one more unit of a variable input, holding all other inputs constant.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.

Total Product Curve

A graphical representation showing how the total quantity of output changes with variation in the quantity of a single input, holding other inputs constant.