A textile company manufactures and sells x shirts per month. The monthly cost and price demand equations are given as C(x)=150,000+30x and p= 50 − x/100. a) Using the analysis from obtaining the demand function and price elasticity of demand, discuss what the textile company can do to increase revenue from the sale of shirts. b) Given a price of $20, determine and analyse whether the company should increase or decrease price to increase revenue. Include in your analysis the price the company should charge per shirt to ensure revenue is maximized and your interpretation of the marginal cost.
A textile company manufactures and sells x shirts per month. The monthly cost and price demand equations are given as C(x)=150,000+30x and p= 50 − x/100. a) Using the analysis from obtaining the demand function and price elasticity of demand, discuss what the textile company can do to increase revenue from the sale of shirts. b) Given a price of $20, determine and analyse whether the company should increase or decrease price to increase revenue. Include in your analysis the price the company should charge per shirt to ensure revenue is maximized and your interpretation of the marginal cost.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A textile company manufactures and sells x shirts per month. The monthly cost and price demand equations are given as C(x)=150,000+30x and p= 50 − x/100.
a) Using the analysis from obtaining the demand function and price elasticity of demand , discuss what the textile company can do to increase revenue from the sale of shirts.
b) Given a price of $20, determine and analyse whether the company should increase or decrease price to increase revenue. Include in your analysis the price the company should charge per shirt to ensure revenue is maximized and your interpretation of the marginal cost.
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