Solved

Use the Information Below to Answer the Following Questions

Question 96

Multiple Choice

Use the information below to answer the following questions.
Fact 13.3.3
Suppose that Roots' marginal cost of a jacket is a constant $125.00 and the total fixed cost at one of its stores is $1,500 a day.This store sells 20 jackets a day,which is its profit-maximizing number of jackets.Then the stores nearby start to advertise their jackets.The Roots store now spends $2,000 a day advertising its jackets,and its profit-maximizing number of jackets sold jumps to 70 a day.
-Refer to Fact 13.3.3.If the nearby firms' advertising decreases the demand for Roots' jackets and makes the demand more elastic,the price of a Roots' jacket ________.If Roots' advertising increases the demand for Roots' jackets and makes the demand less elastic,the price of a Roots' jacket ________.


A) falls;rises
B) rises;rises
C) rises;falls
D) falls;falls
E) does not change;does not change

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions