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Assume you operate the Krua Thai restaurant and are trying to decide how to price Pad Thai on your menu.You know you have 3 types
Assume you operate the Krua Thai restaurant and are trying to decide how to price Pad Thai on your menu.You know you have 3 types of potential customers: high-, mid- and low-value.High-value customers come in 30% of the time and mid-value customers come in 25% of the time.The rest of the time low-value customers come in.The valuation of your Pad Thai for each customer is $14 for high, $12 for mid and $8 for low.The marginal cost of producing Pad Thai is $3.What should you price your Pad Thai at to maximize expected profits
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