Questions

1. Assume that you are the director of marketing for a company that manufactures candy bars (Mars or Snickers, for example). Your boss wants you to increasethe price of your candy bars. You are concerned that increasing the price might not be profitable because you are unsure of the demand elasticity of your product.

1. How could you measure the demand elasticity (price sensitivity)ofyour candy bars?
2. What findings from your measurements would make you want to increase the price?
3. What findings from your measurements would make you not want to increase the price?

1. You have been hired as the assistant manager of a local grocerystore. You notice that there are two different bins/containers for carrots. In one bin/container, the carrots are priced at $1.99/kg, and in the other they are priced at $3.99/kg. The carrots look very similar. You notice that many people are buying the $3.99 carrots.

1. Why do you think most people in this grocery storeare buying the $3.99 carrots?
2. Give arecommendation for the grocer store's pricing strategy?

1. Yourcompanysells roasted coffee beans. You arethinking about selling a new product, ground coffee. Your research suggests that consumers would only be willing to buya 250g bag of ground coffee for $10. You wouldsell the ground coffee to coffee wholesalers. The wholesalers would then sell to coffee shops, and consumers could then buy your 250g bags of ground coffee at the coffee shop. Thecoffee shops usually require a40 percentmarkup, and thewholesalers require a30 percent wholesalermarkup.

1. Assuming thecoffee shop will sell thebags of ground coffeeto the consumerfor $10, whatwill be thepricethat the coffee shops pays for the coffee?
2. What price willyou (the manufacturer)charge thewholesalers?
3. Ifyour(manufacturer)costs are $2 per product, what willbe your percentage (%) markupperproduct?