NEWS WIRE: COMPETITIVE PRESSURE The T-Shirt Business: Too Much Competition At first blush, the T-shirt business looks like a sure thing. All you need is a bunch of blank T-shirts, a wall full of jazzy transfers, and a heat press. You can buy blank shirts for as little as $1.60 apiece and stock transfers for $1.50 a shot. That's a $3.10 investment. Sell the shirt for $15 and you've got a nice, fat profit margin. What could be easier? The trouble is that everyone knows the formula. In fact there are dozens of websites that offer not only the necessary supplies, but also sage advice on how to set up your T-shirt shop, either online or in a real store. They all promise you can get rich selling T-shirts. T-shirt shop owners aren't so sanguine about getting rich. Quite simply, there are far too many T-shirt shops and online outlets. The competition is fierce. So T-shirt shops have to battle for customers every day. As a shop owner in South Padre Island lamented, "Every day you have to compete with other shops. And if you invent something new, they will copy you." Source: Industry websites and news, 2015. Using the data below and the information contained in the News Wire, compute total revenue, average total cost, and profit for a T-shirt shop. Rent = $300.00 per day Labor cost = $1.00 per T-shirt Output (sales) = 40 T-shirts per day Instructions: Round your responses to two decimal places. Total revenue per day $ Average total cost $ Per-unit profit $ Total profit per day $

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 15P

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NEWS WIRE: COMPETITIVE PRESSURE

The T-Shirt Business: Too Much Competition

At first blush, the T-shirt business looks like a sure thing. All you need is a bunch of blank T-shirts, a wall full of jazzy transfers, and a heat press. You can buy blank shirts for as little as $1.60 apiece and stock transfers for $1.50 a shot. That's a $3.10 investment. Sell the shirt for $15 and you've got a nice, fat profit margin. What could be easier?

The trouble is that everyone knows the formula. In fact there are dozens of websites that offer not only the necessary supplies, but also sage advice on how to set up your T-shirt shop, either online or in a real store. They all promise you can get rich selling T-shirts.

T-shirt shop owners aren't so sanguine about getting rich. Quite simply, there are far too many T-shirt shops and online outlets. The competition is fierce. So T-shirt shops have to battle for customers every day. As a shop owner in South Padre Island lamented, "Every day you have to compete with other shops. And if you invent something new, they will copy you."

Source: Industry websites and news, 2015.

Using the data below and the information contained in the News Wire, compute total revenue, average total cost, and profit for a T-shirt shop.

Rent = $300.00 per day

Labor cost = $1.00 per T-shirt

Output (sales) = 40 T-shirts per day

Instructions: Round your responses to two decimal places.

Total revenue per day
$
Average total cost
$
Per-unit profit
$
Total profit per day
$

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