Profit Maximizing Level of T-Shirts for Kansas City Apparels Ltd.

What is the profit maximizing level of t-shirts that Kansas City Apparels Ltd. should sell?

How can we determine the profit maximizing level of t-shirts for Kansas City Apparels Ltd.?

Answer:

The profit maximizing level of t-shirts that Kansas City Apparels Ltd. should sell can be calculated based on the revenue and cost structure of selling Chiefs t-shirts.

For Kansas City Apparels Ltd., the revenue from selling a Chiefs t-shirt is $20, and the cost of producing each t-shirt is $10. This means that the profit for each t-shirt sold is $20 - $10 = $10.

To maximize profits, the company should sell t-shirts until the marginal cost of producing an additional t-shirt equals the marginal revenue earned from selling that additional t-shirt. In this case, assuming that the marginal cost remains constant at $10 per t-shirt, the profit maximizing level of t-shirts that should be sold is when the marginal revenue equals $10.

This indicates that Kansas City Apparels Ltd. should sell as many t-shirts as possible until the revenue from selling an additional t-shirt is less than $10. The profit maximizing level of t-shirts is influenced by market demand and the pricing strategy employed by the company to maximize revenue while managing costs efficiently.

By determining the profit maximizing level of t-shirts, Kansas City Apparels Ltd. can optimize their sales strategy and ensure a sustainable profit margin for their business.