a client e - mails you asking for advice. she is selling t - shirts online featuring pictures of local…

a client e - mails you asking for advice. she is selling t - shirts online featuring pictures of local murals. she charges $15.00 per t - shirt, but she is not sure if that is the best strategy. her sales are ok, but not as high as she needs. shes already tried increasing her social media advertising to drive up sales. shes also been able to decrease her costs to about $8.00 per shirt and doesnt think she can decrease her costs any lower. she needs to increase her revenue and asks you what price you think she should charge. what price do you advise her to charge per t - shirt? enter a dollar value in the box below. $

a client e - mails you asking for advice. she is selling t - shirts online featuring pictures of local murals. she charges $15.00 per t - shirt, but she is not sure if that is the best strategy. her sales are ok, but not as high as she needs. shes already tried increasing her social media advertising to drive up sales. shes also been able to decrease her costs to about $8.00 per shirt and doesnt think she can decrease her costs any lower. she needs to increase her revenue and asks you what price you think she should charge. what price do you advise her to charge per t - shirt? enter a dollar value in the box below. $

Answer

Explanation:

Step1: Analyze the current profit

The current selling - price is $p_1 = 15$ and the cost is $c = 8$. The current profit per unit is $\pi_1=p_1 - c=15 - 8 = 7$. To increase revenue, we need to consider the price - elasticity of demand. However, without information on demand, a simple approach is to test price changes. Since costs are fixed, increasing the price may increase revenue if the decrease in quantity sold is not too large. A small increase in price is a reasonable first step. Let's assume we increase the price by a small amount.

Step2: Suggest a new price

A reasonable increase could be $2$. So the new price $p_2=15 + 2=17$.

Answer:

$17$