Ji Xiang Ju is the largest producer of pickle in two markets. In market A, the...
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Ji Xiang Ju is the largest producer of pickle in two markets. In market A, the pickles carry Ji Xiang Ju's popular label, Tai San, and receive a substantial price premium. In market B, Ji Xiang Ju sells pickles without any logo, uses the simplest package and labels with the name Ji Xiang Ju. The retail price of the pickles carrying the Tai San label is $37 while the Ji Xiang Ju pickles sell for $28. The price elasticity of demand for Tai San pickles is -1.5, and the elasticity of demand for Ji Xiang Ju pickles is -5. Moreover, the research suggests that both elasticities are constant over broad ranges of output. a. Are Tai San's current price optimal? b. Management considers the $28 price to be optimal and necessary to meet the competition. What price should the firm set for the Tai San label to achieve an optimal price ratio? Ji Xiang Ju is the largest producer of pickle in two markets. In market A, the pickles carry Ji Xiang Ju's popular label, Tai San, and receive a substantial price premium. In market B, Ji Xiang Ju sells pickles without any logo, uses the simplest package and labels with the name Ji Xiang Ju. The retail price of the pickles carrying the Tai San label is $37 while the Ji Xiang Ju pickles sell for $28. The price elasticity of demand for Tai San pickles is -1.5, and the elasticity of demand for Ji Xiang Ju pickles is -5. Moreover, the research suggests that both elasticities are constant over broad ranges of output. a. Are Tai San's current price optimal? b. Management considers the $28 price to be optimal and necessary to meet the competition. What price should the firm set for the Tai San label to achieve an optimal price ratio?
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a Tai Sans current price is not necessarily optimal because the price elasticity of demand f... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-1337119207
14th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Posted Date:
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