Bad Ideas Inc. is the world\'s only manufacturer of disposable sweaters. After a

Question

Bad Ideas Inc. is the world's only manufacturer of disposable sweaters. After a sweater is made, Bad Ideas can attach buttons on the right, making it suitable for men, or on left, making it suitable for women. No man will wear a woman's sweater and no woman will wear a man's sweater. Bad Ideas face the following demand and marginal cost schedules for its sweaters: Quantity Men's Demand Price (S) Women's Demand Price (S) Marginal Cost (S) 24 16 12 9.5 10 1.5 2.5 3.5 4.5 How many sweaters does Bad Ideas produce? How many does it sell to men, and at what price? How many does it sell to women, and at what price?

Explanation / Answer

Quantity Men's price Women's price Marginal Cost TR men TR Women MR men MR women 1 10 24 1 10 24 24 24 2 9 16 1.5 18 32 8 8 3 8 12 2 24 36 6 4 4 7 9.5 2.5 28 38 4 2 5 6 4 3 30 20 2 -18 6 5 0 3.5 30 0 0 -20 7 4 0 4 28 0 -2 0 8 3 0 4.5 24 0 -4 0 1) Bad ideas will sell where MR = MC for each group. So mens sweater will be 4. and for women = 3. So total number of sweaters will be 7. 2) following from 1) mens sweater sold will be 4 at price = $7 and women's sweater sold will be 3.at price = $8.

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