MARKETING:​Kroger, the​ country's leading​ grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If​ you've priced organic​ foods, you know they are more expensive. For​ example, a dozen conventionally farmed​ Grade-A eggs at Kroger costs consumers​$1.61.6​,whereas Simple Truth eggs are priced at​$3.43.4per dozen. One study found​ that, overall, the average price of organic foods is 85 percent more than that of conventional foods.​ However, if prices get too​ high, consumers will not purchase the organic options. One element of sustainability is organic​ farming, which costs much more than conventional​ farming, and those higher costs are passed on to consumers. Suppose that a conventional egg​ farmer's average fixed costs per year for​ conventionally-farmed eggs are​ $1 million per​ year, but an organic egg​ farmer's fixed costs arethreethreetimes that amount. Further assume that the organic​ farmer's variable costs of​$1.81.8per dozen aretwicetwiceas much as conventional​ farmer's variable costs.Most large egg farmers sell eggs directly to retailers. Using​ Kroger's prices, what is the​ farmer's price per dozen to the retailer for conventional and organic eggs if​ Kroger's margin is1515percent based on its retail​ price?The price the farmer sells a dozen of conventional eggs is​$nothing.​(Round to the nearest​ cent.)

Question
Asked Jun 4, 2019

MARKETING:

​Kroger, the​ country's leading​ grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If​ you've priced organic​ foods, you know they are more expensive. For​ example, a dozen conventionally farmed​ Grade-A eggs at Kroger costs consumers
​$1.61.6​,
whereas Simple Truth eggs are priced at
​$3.43.4
per dozen. One study found​ that, overall, the average price of organic foods is 85 percent more than that of conventional foods.​ However, if prices get too​ high, consumers will not purchase the organic options. One element of sustainability is organic​ farming, which costs much more than conventional​ farming, and those higher costs are passed on to consumers. Suppose that a conventional egg​ farmer's average fixed costs per year for​ conventionally-farmed eggs are​ $1 million per​ year, but an organic egg​ farmer's fixed costs are
threethree
times that amount. Further assume that the organic​ farmer's variable costs of
​$1.81.8
per dozen are
twicetwice
as much as conventional​ farmer's variable costs.
Most large egg farmers sell eggs directly to retailers. Using​ Kroger's prices, what is the​ farmer's price per dozen to the retailer for conventional and organic eggs if​ Kroger's margin is
1515
percent based on its retail​ price?
The price the farmer sells a dozen of conventional eggs is
​$nothing.
​(Round to the nearest​ cent.)
check_circleExpert Solution
Step 1

The provided information has been summarised as below

Step 2

So, Kroger's margin in dozen conventionally farmed eggs=1.61*15%=$0.24

So, Kroger's purchase price of dozen conventional eggs=1.61-0.24=$1.37

Also, Kroger's m...

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