Suppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the firm's

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Suppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the firm's shops, total fixed cost is $500 a day. The profit maximizing number of jackets sold in this shop is 30 a day. Then the shops nearby from other retailers start advertising their jackets. The Tommy Hilfiger shop decides to spend $1,000 a day advertising its jackets, and its profit maximizing number of jackets sold jumps to 60 a day.

Before advertising: Suppose that the price elasticity of demand is 2. Can you compute the price of a Tommy Hilfiger jacket? And the markup? Please, compute the amount of maximal profits.

Posted Date: May 18, 2024 03:02 AM

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Suppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the firm's

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