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In the beach city of Santa Barbara, California, there are seven bathing suit stores, each with the same schedule of costs and each facing an identical demand curve. Swim N Style is a typical store:
Suits sold (per hour) Price Total Cost
1 $68 $70
2 66 80
3 64 85
4 62 90
5 60 100
6 58 115
7 56 136
8 54 164
9 52 200
10 50 245
a) Calculate total revenue, marginal revenue, marginal cost and average cost at each level of sales for the store.
b) If Swim N Style is a profit maximizer, what number of suits will it sell per hour? What will its price and profit be?
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