Reference no: EM133148479

DUEL OF THE SHOPS Lukas and John are the managers and owners of the shops. The shops are located opposite each other on the edge of the town, close to a busy road. There are no other shops in the town. Now they sell all the goods in the shops at the same prices.

Mr Lukas wonders whether he should not raise the prices of the goods, because he thinks that people will buy almost the same amount of goods even if the price is slightly higher. He thinks that if the price goes up, he will get more income, even though he will sell slightly less goods.

Would you agree with Lukas? Explain your answer.

B. John is considering whether he should reduce the prices of the goods in his shop, because if his shop were slightly lower than Luke's, it would help to make his business more profitable.

Would you agree with John? Explain your answer.

C. What else could John and Luke do to increase the profitability of their business?

C. What else could John and Luke do to increase the profitability of their business?