Draw a supply and demand framework

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Question 1 - Managing promotions in seasonal demand products

Ice cream has a strong seasonality with peak demand in the summer and another smaller demand during Christmas period.

Draw a supply and demand framework to graphically represent changes: peak demand vs off peak demand.

What happens to price and quantities in the peak demand period?

Question 2 - Managing promotions in seasonal demand products

Now imagine that you are a small ice cream producer that sells its product through a large supermarket chain.

You decide to make a price-promotion during summer. You know that ice cream price demand elasticity is between 1.5-2.0

What would you expect would happen to total revenues?

Is this a justifiable decision given your answer in Q1?

What would you expect would happen to total revenues?

Reference no: EM133276649

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