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The following table summarizes information about U.S. pancake syrup products:
|
Average Consumer
|
|
|
|
Willingness to Pay
|
Price
|
Average Costs
|
|
Brand
|
(Cents/Ounce)
|
(Cents/Ounce)
|
(Cents/Ounce)
|
|
Hungry Jack
|
20
|
15
|
14
|
|
Aunt Jemima
|
21
|
19
|
17
|
|
Log Cabin
|
28
|
24
|
20
|
|
Mrs. Butters worth
|
21
|
18
|
14
|
Assume the following apply to the time period relevant for the question:
• Demand remains stable.
• No new firms enter and no new products are introduced.
• No changes in advertising are made.
• Firms have constant returns to scale and input prices are constant.
(a) Given current prices, which brand do you expect to gain share in the next few months?
(b) Which brand can earn the highest profits in the longer run (assuming prices can be changed)?
