As a business consultant, you have been hired by a small sneaker manufacturer whose goal is to produce sneakers with sustainably source material and ethical labor practices. The graph shows the demand and marginal revenue (MR) curves faced by the company for two different groups of consumers. They can produce a pair of sneakers for a constant marginal cost (MC) of $20/pair, can identify varying consumer groups, and they have no fixed costs. Use the graph to answer the questions. Price per pair $100 06 90 80 70 60 50 50 40 40 60 What price should the company charge? 30 50 20 They should price discriminate and charge $100/pair MR 2 and $20/pair. 10 They should produce where MR = MC and Demand 2 0 charge $60/pair. They should shutdown in the short run because he will not be able to cover his variable costs of $10,000. They should price discriminate and charge $60/pair and $70/pair. The company's profits will be $16,000 $9,000 $21,000 -$2,000 MR 1 Supply=MO Demand 1 100 200 300 400 500 600 700 800 900 14 Pairs of shoes per we

As a business consultant, you have been hired by a small sneaker manufacturer whose goal is to produce sneakers with sustainably source material and ethical labor practices. The graph shows the demand and marginal revenue (MR) curves faced by the company for two different groups of consumers. They can produce a pair of sneakers for a constant marginal cost (MC) of $20/pair, can identify varying consumer groups, and they have no fixed costs. Use the graph to answer the questions. Price per pair $100 06 90 80 70 60 50 50 40 40 60 What price should the company charge? 30 50 20 They should price discriminate and charge $100/pair MR 2 and $20/pair. 10 They should produce where MR = MC and Demand 2 0 charge $60/pair. They should shutdown in the short run because he will not be able to cover his variable costs of $10,000. They should price discriminate and charge $60/pair and $70/pair. The company's profits will be $16,000 $9,000 $21,000 -$2,000 MR 1 Supply=MO Demand 1 100 200 300 400 500 600 700 800 900 14 Pairs of shoes per we

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 3TY

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