Walks Softly Sells Customized Shoes

question 17

Multiple Choice

Walks Softly sells customized shoes.Currently,it sells 16,000 pairs of shoes annually at an average price of $68 a pair.The company is considering adding a lower-priced line of shoes that will sell for $39 a pair.Walks Softly estimates it can sell 7,000 pairs of the lower-priced shoes but will sell 1,000 less pairs of the higher-priced shoes by doing so.What is the amount of the sales that should be used when evaluating the addition of the lower-priced shoes?

• A)$205,000
• B)$245,000
• C)$313,000
• D)$273,000
• E)$1,293,000

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Definitions:

Interdependence

A situation in which the outcome or payoff for each participant depends on the actions of others, commonly found in competitive and cooperative environments.

Market Structure

The organizational and other characteristics of a market that significantly affect the nature of competition and pricing within the market.

Product Diversity

The range of different products or services offered by a company or available in a market.

Monopolistic Competition

Monopolistic competition is a market structure characterized by many firms offering differentiated products or services, with some degree of market power due to product differentiation.