a) Are consumers price sensitive? Why or why not? (be as precise as you can - you have estimates!). Does this price sensitivity make sense given the good we are examining?

b). How sensitive are our consumers to changes in the rival good's price? Explain in detail.

c). Suppose we decide to charge a per ounce price of $2, while at the same time our rival charges a price of $2.15. All else equal, what would you expect sales to be? How confident are you in your forecast? Explain.

d) Suppose we are charging a price of $2 and our current marginal cost is $1.50 Are we maximizing profits at this price? If not, should we raise or lower price? Why?

13 JX B D F . City P A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 32.92 28.51 33.94 33.45 35.68 29.01 30.68 43.14 20.84 31.27 35.45 32.14 43.02 34.73 43.14 33.17 41.59 32.1 45.74 35.92 1.89 1.94 1.99 2.04 2.09 1.89 1.94 1.99 2.04 2.09 1.89 1.94 1.99 2.04 2.09 1.89 1.94 1.99 2.04 2.09 32.4 29.9 29.1 28.6 30.2 31.4 30.3 30.4 28.6 26.3 26.5 29.5 29.1 31.2 23.8 28.8 29.3 27.4 27.8 30.2 E G Psub Pop 4.38 2.08 98.7 4.12 2.06 104.5 5.06 2.15 105.1 5.36 2.18 106.9 5.38 2.18 108.9 3.47 1.99 115.2 4.06 2.05 117.8 5.29 2.17 120.2. 3.39 1.98 120.8 5.12 2.16 122.7 4.44 2.09 122.9 4.18 2.06 124.6 5.57 2.2 125.8 3.57 2 6.43 2.39 133.1 3.95 2.04 135.6 4.04 2.05 136.5 4.36 2.08 141.8 5.81 2.23 144.8 4.63 2.11 150.1 3 131.9+