17.2 Output and Price Decisions
MyEconLab Concept Video
Think about the decisions that Lucky Brand must make about the jeans it produces. First, Lucky Brand must decide on the design and quality of its jeans and on its advertising program. We’ll suppose that the firm has already made these decisions so that we can concentrate on the firm’s output and pricing decisions. Then we’ll study design, quality, and advertising decisions in the next section.
Because Lucky Brand has chosen the design and quality of its jeans and the amount of advertising, it faces given costs and market demand. How, with these costs and market demand for its jeans, does the firm decide the quantity of jeans to produce and the price at which to sell them?
The Firm’s Profit-Maximizing ...
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