Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Harry and Garry are twin brothers, and they each own appliance stores. Harry lives in Charleston, South Carolina and Garry lives in Gainesville, Florida.

Harry and Garry are twin brothers, and they each own appliance stores. Harry lives in Charleston, South Carolina and Garry lives in Gainesville, Florida. Even though they live far apart, they talk often, and trade hints and grievances about the appliance retail business. Lately, they have been discussing the fact that in a tough economy consumers often hold off on the upgrade of an appliance as long as possible, deciding that they will wait to "trade up" when economy turns around or the appliance breaks, whichever comes first. The brothers are discussing the wisdom of instituting short-term rebates in order to make their appliances more attractive to consumers, and to increase their rather dismal recent sales figures. Unbeknownst to each other, both Harry and Garry decide to institute a retail-level rebate on a specific high-end stove. The price of the stove in both stores is S1,000, and both Harry and Garry's rebate offers will be advertised in the Sunday paper, and will last one week. Neither Harry nor Garry has done the research necessary to discover the Just Noticeable Difference (which, for the target market and that product category in that economic climate, is 15%). Harry offers consumers a $100 rebate on the $1,000 stove. Garry offers consumers a $200 rebate on the S1,000 stove. Harry sells 20 stoves during the rebate period, which is about the same number that he sold the week just prior to the rebate offer. Garry sells 30 stoves during the rebate period, which is an increase of about 10 more than he sold the week just prior to the rebate offer. Did the fact that he didn't know the accurate Just Noticeable Difference cost Harry any Money? Yes/No (Circle one). If yes, how much? Did the fact that he didn't know the accurate Just Noticeable Difference cost Garry any Money? Yes/No (Circle one). If yes, how much?

Step by Step Solution

3.32 Rating (134 Votes )

There are 3 Steps involved in it

Step: 1

The Just Noticeable Difference JND as provided in the qu... blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance Turning Money into Wealth

Authors: Arthur J. Keown

7th edition

978-0133856507, 013385650X, 133856437, 978-0133856439

More Books

Students also viewed these Accounting questions