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

question 178

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 markup

• A) decreases by $100.
• B) increases by $50.
• C) increases by $75.
• D) decreases by $60.

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Definitions:

Kneeling Position

A physical stance where one or both knees touch the ground, often used for stability in work or as a form of respect or submission.

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The group of muscles surrounding the hip joint that are responsible for the movement of the hip and maintaining stability.

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The muscles located at the back of the lower leg, responsible for movements of the foot and ankle.

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