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

question 283

Multiple Choice

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 average total cost

• A) falls by $20 per coat.
• B) rises by $50 per coat.
• C) rises by $30 per coat.
• D) falls by $40 per coat.

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Definitions:

Mass Society Theory

A sociological perspective that suggests society is integrated by a shared mass culture, often influenced by media, and marked by a loss of individuality.

Émile Durkheim

A founding figure in sociology, Durkheim is known for his exploration of social phenomena including the study of social cohesion and the role of religion in society.

Collectivity

A substantial number of people who join together on the basis of loosely defined norms.

Sociologists

Experts or scientists who study societies, examining the structures, systems, and dynamics of human interaction and social behavior.