Quiz 5
Economics 121 - Spring 1997 - Prof. Becker
A2Z Stores, Inc., is negotiating to be the exclusive seller of Wide Seat jeans (an answer to Levi's Wide Leg jeans, but for aging Baby Boomers, instead of Gen-Xers).
ABC can sell Wide Seat jeans at a marginal cost of $30 each; AVC is also a constant $30 each. Demand, marginal revenue, and average total cost are shown in the graph below.
(a) What price will ABC select for Wide Seat jeans? How many will be sold?
(b) What is the amount of ABC's fixed costs in dollars?
(c) How much will ABC's profits be? Show this on the graph as well.
(d) What is the allocatively efficient price and quantity?
Why is it not feasible?