ECO - Assume the demand for t-shirts sold by SU’s Economics Club

1) Assume the demand for t-shirts sold by SU’s Economics Club is:

The club is considering a price of $12 per shirt for its sale this year. The T-shirts are donated to the
club by faculty members of the economics department, so the club pays nothing for the shirts it
sells. The club wants only to maximize the revenue it raises for club activities each year. The club’s
president claims that if the price of each shirt were set higher than $12, the club would make more
money on each shirt sold. As an economist well-grounded in market demand, elasticity and,
revenue relationships, you have been called upon to lend your knowledge and insight into the
Economics Club’s deliberations.
a. Without making any revenue calculations, would you support the president’s suggestion to
charge more than $12 per shirt? Why or why not. Please explain your answer in full.
b.
c.

1

What price would you recommend without making any revenue calculations?
Now support your price recommendation by making the appropriate revenue calculations.