Question
Momma's Pizza, a seller of frozenpizza, is considering introducing a healthier version of its pizza that will be low in cholesterol andgluten-free. The firm expects
Momma's Pizza, a seller of frozenpizza, is considering introducing a healthier version of its pizza that will be low in cholesterol andgluten-free. The firm expects that sales of the new pizza will be $ 22 million per year. While many of these sales will be to newcustomers, Momma's Pizza estimates that 44 % will come from customers who switch to thenew, healthier pizza instead of buying the original version.
a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the newpizza?
b. Suppose that 51 % of the customers who will switch fromMomma's Pizza's original pizza to its healthier pizza will switch to another brand ifMomma's Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in thiscase?
a. The incremental sales associated with introducing the new pizza will be $
million.(Round to two decimalplaces.)
b. If 51 %of the customers who will switch fromMomma's Pizza's original pizza to its healthier pizza will switch to another brand ifMomma's Pizza does not introduce a healthierpizza, then the incremental sales will be $
million.(Round to two decimalplaces.)
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