Pricing and impact on demand Andrea Kimball has recently acquired a franchise of a well-known fast-food restaurant chain. She is considering a special promotion for a week during which hamburger prices would be reduced $0.40 from the regular price of $1.09 to $0.69. Local advertising expenses for this special promotion will amount to $4,500. Andrea expects the promotion to increase sales of hamburgers by 20% and French fries by 12%, but she expects the sales of chicken sandwiches to decline by 8% (because some customers, who otherwise may have ordered a chicken sandwich, will order a hamburger instead because of its attractive low price). The following data have been compiled for sales prices, variable costs, and weekly sales volumes:

RequiredEvaluate the expected impact of the special promotion on sales and profits. Should Andrea go ahead with this special promotion? What other considerations are relevant in thisdecision?

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VARIABLE COSTS S0.51 PRODUCT SALES PRICE SALES VOLUME 20,000 10,000 20,000 Hamburgers $1.09 Chicken sandwiches French fries 1.29 0.89 0.63 0.37