A large restaurant chain sells hamburgers and French fries as separate products. There are 2 million consumers across all of the restaurant's locations. Of those, 1 million consumers value hamburgers at $5 and French fries at $1, while the other 1 million value hamburgers at $3 and French fries at $3. The restaurant is considering three pricing strategies: Sell hamburgers for $5 and French fries for $3. Sell hamburgers for $4 and French fries for $2 Sell hamburgers and French fries as one product combined for $6. Calculate the restaurant's profit under each strategy. Which of these pricing strategies should the restaurant adopt to maximize its profits?
A large restaurant chain sells hamburgers and French fries as separate products. There are 2 million consumers across all of the restaurant's locations. Of those, 1 million consumers value hamburgers at $5 and French fries at $1, while the other 1 million value hamburgers at $3 and French fries at $3. The restaurant is considering three pricing strategies: Sell hamburgers for $5 and French fries for $3. Sell hamburgers for $4 and French fries for $2 Sell hamburgers and French fries as one product combined for $6. Calculate the restaurant's profit under each strategy. Which of these pricing strategies should the restaurant adopt to maximize its profits?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter23: Managing Vertical Relationships
Section: Chapter Questions
Problem 1MC
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