Question
Econ Coffee shop normally sells 24 ounces of coffee beans for $15. The shop often has two promotions. You are an economist hired to determine
Econ Coffee shop normally sells 24 ounces of coffee beans for $15. The shop often has two promotions. You are an economist hired to determine the best promotion strategy. During some promotions, it offers "25 percent more coffee for free". During the other promotion, it offers "25 percent off" the normal price. After reviewing historical sales data, you find "25 percent more for free" sells a lot more coffee than "25 percent off" the normal price. (10 points total)
A.Which promotion is better for the store as it relates to the price they receive per ounce of coffee? (show all calculations). (7.5 points)
B.Are the store's customers making a systematic error? If so, explain? (2.5-points) (10 points total).
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