Question

·      A department store has purchased 5,000 swimsuits to be sold during the summer sales season. The

season lasts three months and the store manager forecasts that customers buying early in the season are likely to be less price sensitive and those buying later in the season are likely to be more price sensitive. The demand curves in each of the three months are forecast to be as follows: d₁ = 2,000 – 10p₁, d₂ = 2,000 – 20p₂, and d₃ = 2,000 – 30p₃. If the department store is to charge a fixed price over the entire season, what should it be? If the department store wants dynamic prices that vary by month, what should they be?

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