Business Math

Fall 2019 M300                                   Pricing Assignment                           Section No. 13508

 

NAME (print):                                                                        USERNAME:            

 

For the questions below, please clearly highlight your answer

 

  1. John is a brand manager for Coors Light. John decided to drop the price for Coors Light from $12/case in January 2009 to $10/case in February 2009.  He examined the data in early March and found February demand = 120,000. January demand = 100,000 cases.  The elasticity of demand is

 

  1. About -1.40
  2. About -.36
  3. About -.30
  4. About -1.20

 

  1. The response to the price cut was

 

  1. Elastic
  2. Inelastic

 

  1. If Janis is selling Pizza Hut pizzas and her boss says that she wants a 50% markup on the price and the cost is $4.00, what is the price?

 

  1. $8
  2. $12
  3. $15
  4. $16

 

 

  1. If the drinks Janis is selling are priced at $2.50 for the consumer and the cost is $1.00, what is the markup as a percentage of the cost?

 

  1. 50%
  2. 100%
  3. 150%
  4. 200%

 

 

  1. Stacy evaluates sales data for the I’m-A-Little-Cooler mini-cooler company. She knows that average monthly demand = 6,000 coolers when they are priced at $16/cooler.  Stacy estimated cost of goods sold for the product to be $6/cooler.  If the price of the product is increased by 50% (but the cost remains the same), how many fewer coolers can she sell to produce the same level of profit as she does with a $16 price and $6 cost?

 

  1. 3,333 fewer coolers
  2. 4,000 fewer coolers
  3. 4,307 fewer coolers
  4. 2,667 fewer coolers

 

  1. The elasticity for an 18 ounce tube of Coppertone Company’s sun block is –4 in the southern U.S. and –3 in the northern U.S.. If the price of the Coppertone is $7.30 in the north for this product, what should the firm charge for this product in the south?

 

  1. $6.85
  2. $9.33
  3. $6.50
  4. $7.30

 

  1. Wal-Mart is selling one roll of Bounty paper towels for $3.00. Wal-Mart buys Bounty from Procter and Gamble for $1.00 per roll.  Wal-Mart’s markup is how much?

 

  1. $1.00 per roll
  2. $2.50 per roll
  3. $1.50 per roll
  4. $2.00 per roll

 

  1. AT&T offers a cable plan in the northeastern U.S. for $40/month with the cable plan experiencing an elasticity of -3. AT&T is considering offering the same cable plan in the western US. The firm knows elasticity of demand = -4 in the west. What price should be presented to customers in the west?

 

  1. Around $55
  2. Around $51
  3. Around $44
  4. Around $35

 

(Q 9-Q10) Paul is a brand manager for FIJI water. He learned in Kroger Stores Central Indiana data that demand for FIJI water= 51,000 cases in Feb 2011 and 34,000 cases in Mar 2011. Price/case = $3 in Feb 2011 and $5 in Mar 2011.

 

Q9. The elasticity of demand is

  1. -1.25
  2. -2.0
  3. -.50
  4. -.83

Q10. Are buyers price sensitive or insensitive?

  1. Sensitive
  2. Insensitive

 

 

 

 

 

 

 

EQUATIONS

 

  1. Price = Markup + Cost

P    =  MU + C

MU =  P  – C

C     =  P – Markup

MU on Price (MUP) =  MU/P

MU on Cost  (MUC)  =  MU/C

 

 

 

 
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