Question
Leo's Fruit Stand has always stocked just one brand of apples: Gala. Gala apples cost Leo $0.19each, and he sells them for $0.60. Leo is
Leo's Fruit Stand has always stocked just one brand of apples: Gala. Gala apples cost Leo $0.19each, and he sells them for $0.60. Leo is considering adding Rome apples to his stand. They will cost him $0.27 each and he plans to sell them for $0.70 each. Leo expects Rome apple volume to be half of Gala's previous volume of 2,600 per month. He also expects 75% of Rome volume to be taken from Gala volume.
CALCULATED VARIABLES: gdecl = $399.75 romec = $559 romeu = 1,300
QUESTION: If next month, Gala sales are 2,250 units sold, while sales for Rome apples remained constant, what would be the new cannibalization rate? (Assume all of the decrease in Gala sales is due to the new Rome apples)
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