Question 1: George has been selling 5,000 T -shirts per month for $8.50. When he increased the price to $9.50, he sold only 4,000 T- shirts. What is the demand elasticity? If his marginal cost is $4.00 per shirts, what is the desired markup and what is his initial actual markup? Was raising the price profitable?
Question 2: The variety of Riverside Ranger logo T -shirts includes 12 different designs. Setup between designs takes one hour (and $18,000), and after setting up, you can produce 1,000 units of a particular design per hour (at a cost $8,000). Does this production exhibit scale economies or scope economies.
Question 3: Why might intangible resources like human capital and intellectual assets be a more likely source of sustainable competitive advantage than tangible resources?