You invent a revolutionary chewing gum. It causes its chewer to lose weight and grow lustrous hair with no side effects. You set up production of this gum in several flavours and plan to use the revenues to fund R&D into equivalently great chocolate bars and sweeties. Every market wants to stock your gum. Gum comprises about 10% of junk food sales at the checkout counter of the typical retail outlet. At present, UniFever is a near monopolist at the checkout counter of the store in gum, chocolate bars, and sweeties with a market share of 95%. Upon the announcement of your gum invention, UniFever rolls out a new contract with retailers. If the retailer buys at least 90% of the contents of its checkout counter from UniFever, it will receive a discount of 5%. Your retailers tell you about this contract. 

How significantly does this contract impact you? Will you be able to grow into chocolate bars?

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Answer Step by Step Explanation i UniFevers contract with retailers offering a 5 discount if they bu... View the full answer