The Salty Pawz margins are good, but would Wanda be better off to lower prices and possibly sell more? Would dropping her price even make a difference or would she just be giving away her profits?
Between recalls on mass-produced commercial dog food and a general understanding of the benefits of a healthier diet for pets, the demand for natural or organic dog food is experiencing a significant increase. Wanda’s treats are not cheap, and she wonders if maybe Salty Pawz products are overpriced. Wanda knows nothing about the economics of supply and demand, so she comes to you for advice.
Your Task
The Salty Pawz margins are good, but would Wanda be better off to lower prices and possibly sell more? Would dropping her price even make a difference or would she just be giving away her profits? What would the impact on demand be if she reduced her price?
Use the “Forecasting Supply and Demand” data in the “Financial Information” section of the Salty Pawz Case Study. The information there illustrates the potential impacts on quantity supplied and quantity demanded at various price points for Salty Pawz products.
Using the charts and data, create a graphical representation of Supply and Demand Curves for the four Salty Pawz products that Wanda sells.
For each product, determine the equilibrium point where Quantity Supplied = Quantity Demanded
CRITERIA
Create graphical representations of the supply and demand curves for the four Salty Pawz products.
Accurately determines equilibrium point for each Salty Pawz product.
Provides analysis of impact of lower product prices that is qualified with data from data and graphical representations.
Provides explanation of impact of dropping price that is qualified with data from data and graphical representations.
Explains impact on demand based on reduction of product price, and substantiates with data and graphical representations
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