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Kroger, the country's leading grocery store chain, added a line of private label organic and natural foods called Simple Truth to it stores. If you've
Kroger, the country's leading grocery store chain, added a line of private label organic and natural foods called Simple Truth to it stores. If you've price organic foods, you know they are more expensive. For example, a dozen conventionally farmed grade-A eggs at Kroger costs consumers $1.90, whereas Simple Truth eggs are priced at $4.20 per dozen. One study found that, overall, the average price of organic foods is 85% more than that of conventional foods. However if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to customers. Suppose that a conventional egg farmer's average fixed cost per year for conventionally farmed eggs are $1 million per year, but an organic farmer's fixed costs are four times that amount. Further assume that the organic farmer's variable cost of $2.20 per dozen are twice as much as conventional farmer's variable costs. Most large egg farmers sell eggs directly to retailers. Using Kroger's prices, what is the farmer's price per dozen to the retailer for conventional and organic eggs if Kroger's margin is 15% based on its retail price?
The price the farmer sells a dozen of conventional ask is $____.
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