Benny's Bagels is considering a month-long discount on bagel sandwiches, reducing the price from $5.00 to $4.00.
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Question:
Benny's Bagels is considering a month-long discount on bagel sandwiches, reducing the price from $5.00 to $4.00. Advertising costs $1000. Benny expects bagel sandwich sales to increase by 30%, with a 10% drop in bagel sales. Weekly data are:
Product | Sales Price | Variable Costs | Sales Volume |
Bagel Sandwiches | $5.00 | $2.50 | 600 |
Bagels | $2.50 | $1.25 | 700 |
Requirement: Analyze the impact on sales and profitability.
Expert Answer:
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