An article in the Wall Street Journal used the headline Procter & Gamble, in a Strategy Shift,

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An article in the Wall Street Journal used the headline “Procter & Gamble, in a Strategy Shift, Moves to Raise Prices” and the sub-headline “Company would seek to push through large price increases on Pampers diapers and Bounty paper towels.”

a. The article notes that Pampers and Bounty are two of Procter & Gamble’s (P&G’s) most popular brands. Is that fact relevant to P&G’s decision to raise prices? Briefly explain.

b. The article also states, “As the biggest player, P&G tends to drive industrywide pricing moves.” What does the article mean by “industrywide pricing moves”? Would competitors raising their prices make the demand for Pampers more elastic or less elastic? Briefly explain.

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Macroeconomics

ISBN: 9780135801741

8th Edition

Authors: Glenn Hubbard, Anthony Patrick O Brien

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