The T4U Shop creates semi-customized t-shirts. The customer selects the color and size of the shirt he
Question:
The T4U Shop creates semi-customized t-shirts. The customer selects the color and size of the shirt he or she wants and picks out a graphic design from over 100 that the shop has to offer. The shirt is then produced while the customer waits. Regardless of the color, size, or design chosen, the shirts cost T4U five dollars to produce. The owner of the shop, Mr. Jeans, originally priced the shirts at $24, but was disappointed that demand was a measly 95 shirts, so he decreased the price to $14 and was happy to find that his sales increased to 120 shirts. T4U is located in a tourist town; however, it is on a side street that doesn't get as much traffic as shops located on the main drag, so Mr. Jeans is considering handing out free t-shirts to attract more customers.
Assuming a linear demand function, how many t-shirts should Mr. Jeans be prepared to give away?