Describe a skimming price and a penetration price

Reference no: EM13186488

Jessica Alba, a famous actress, starts the baby and family products business, The Honest Company, with Christopher Gavigan. Alba and Gavigan set up their site so that families could choose what kinds of non-toxic, all natural products they'd like to use and get them in a bundle. Families can choose all kinds of products from food, to hygiene necessities and cleaning supplies. Suppose that they are thinking of expanding their business into five domestic markets - Phoenix, Dallas, Chicago, New York, and Atlanta. Assume that their primary goal of business is to maximize economic profits although they want to do business honestly.

a. You are a business adviser for Alba and Gavigan. Describe a skimming price and a penetration price, and advise them whether they should charge a skimming price or a penetration price, with supporting reasoning for and against each pricing alternative.

b. Are they likely to make economic profits initially? Can they continue to make economic profits in the longer term? Why or why not? Discuss.

c. What advice would you give to Alba and Gavigan to help them make more profit in the longer term?

Reference no: EM13186488

Questions Cloud

Explain what is the daily input rate of coal : A 680 MW coal fired power plant is 34% efficient at producing electricity. The coal has a heating value of 20,000 kJ/kg, an ash content of 5.5% and a sulfur content of 4.5%. Note: 1 MW = 1000 kW , and 1 kW = 1 kJ/s. a. What is the daily input rate..

Explain light of theory of supply and demand for regulation : Environmental Protection Agency (EPA) regulations tend to go through many stages of review and approval before they are implemented. Not only do many regulators have to approve a new regulation, but comments and reviews from industry and conservat..

Calculates and displays the property tax : Write a java application that calculates and displays the property tax for N property owners. N should be declared as a constant and it should be equal to the largest digit of your student ID number

How many magnesiun atoms are in three moles of mg : How many magnesiun atoms are in 3 moles of Mg3(PO4)2? 2) A substance, NxOy has the composition by mass 69.57% O. Calculate the molecular formula of this substance if its molecular mass is 92 grams.

Describe a skimming price and a penetration price : Jessica Alba, a famous actress, starts the baby and family products business, The Honest Company, with Christopher Gavigan. Alba and Gavigan set up their site so that families could choose what kinds of non-toxic, all natural products they'd like ..

Compute the value of q and w delta e : Calculate the value of q, w, delta E , for the reversible isothermal expansion at 300k of 2.00 mol of a perfect gas

Explain mass of a preservative and sodium benzoate : A brand of lunchmeat contains 0.11% by mass of a preservative, sodium benzoate, C6H5COONa. Health Canada recommends a an upper level intake of Na to be 2300 mg

Explain changes the freezing temperature of the camphor : changes the freezing temperature of the camphor by -2.10°C. Given camphors freezing-point depression constant of -37.7°C/m, calculate the molar mass of estradiol.

Why firms collude to form a cartel : Consider a market with the market demand D: P = 80 - Q, which is served by four Cournot oligopolistic producers (firms) with the constant marginal cost MC = $30 and no fixed cost.When these four firms collude to form a cartel (they behave like a mo..

User Account

All Pages