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Suppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the firm's shops, total fixed cost is $500 a day. The profit maximizing number of jackets sold in this shop is 30 a day. Then the shops nearby from other retailers start advertising their jackets. The Tommy Hilfiger shop decides to spend $1,000 a day advertising its jackets, and its profit maximizing number of jackets sold jumps to 60 a day.
What is the shop's average total cost of a jacket sold BEFORE the advertising begins?
What is the shop's average total cost of a jacket sold AFTER the advertising begins?
Explain how the income per day is linked to investments in transportation?
1) Using the concept of the differential, determine the effect on output of two additional units of labor when K = 8, N = 20
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According to the rule for optimal input usage, a firm should hire a person as long as her marginal revenue product is greater than her marginal cost to the company. In offering such training programs, is a company violating the optimality rule?
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