The WWQX Co

question 108

Multiple Choice

The WWQX Co.sells shirts.Shirts with the company label on the tag are perceived to be of higher quality than shirts with the store's label.Yet,shirts are of identical quality regardless of the label.The demand for perceived high-quality shirts is p_h = 80 - q_h.The demand for perceived low-quality shirts is p_l = 19 + p_h - q_l.The firm can produce shirts at TC = 2q_h + 2q_l.How many shirts does the firm label as low quality and how many as high quality? What prices are charged?

• A) q_l = 29; q_h = 39
• B) q_l = 39; q_h = 79
• C) q_l = 19; q_h = 25
• D) q_l = 20; q_h = 18

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Definitions:

Weighted-Average

A mathematical average that takes into account the varying degrees of importance of the numbers in a data set.

Ending Inventory

The total value of all unsold goods that a company has in its possession at the end of an accounting period.

Periodic Inventory

An inventory accounting system where inventory levels and cost of goods sold are determined at the end of an accounting period.

Perpetual Inventory System

An accounting approach to continuously track inventory levels, purchases, and sales, updating the inventory records in real-time.