MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Question
Chapter 8, Problem 13PAA
To determine
To explain: The reason for pizza varieties and profitability in long-run.
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When the first Pizza Hut opened its doors back in 1958, it offered consumers one style of pizza: its Original Thin Crust Pizza. Since its modest beginnings, Pizza Hut has established itself as the leader of the $25 billion pizza industry. Today, Pizza Hut offers six styles of pizza, including Pan Pizza, Stuffed Crust Pizza, and its Hand-Tossed Style.
Explain why Pizza Hut has expanded its offerings of pizza over the past six decades, and discuss the long-run profitability of such a strategy.
Refer to the Front Page to answer two questions.
FRONT PAGE
Pricing Disney+
Disney decided it wanted to provide streaming services directly to customers, rather than
renting its library of films and television shows to other streaming services like Netflix. But
how successful would a streaming service be? In other words, what did the demand for a
"Disney+" streaming service look like? Disney knew that the number of subscribers would
depend not just on the attractiveness of the Disney archives, but also on the subscription
price. After doing some market research, Disney decided to launch Disney+ at a price of
$6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019,
10 million people signed up on the first day-a resounding success!
If Connecting U wants to MAXIMIZE its profits, what should they do?
a) Connecting U should maintain their price at $16. Dropping the price would decrease their total revenue and profits.
b)Connecting U should drop their price to $14.48. By dropping the price, they would increase their total revenue and profits.
is the answer b?
Note- look at the info on the right-hand side of the pic
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