Can you say what happens to tommy''s markup

Reference no: EM131297815

Suppose that Tommy Hilfiger's marginal cost of a jacket is a constant $100 and at one of the firm's shops, total fixed cost is $2,000 a day. The profit-maximizing number of jackets sold in this shop is 20 a day. When the shops nearby start to advertise their jackets, this Tommy Hilfiger shop spends $2,000 a day advertising its jackets, and its profit-maximizing output jumps to 50 jackets a day.

Can you say what happens to Tommy's markup and its economic profit? Why or why not?

Reference no: EM131297815

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