Given current prices, which brand do you expect to gain share in the next few months?

Given current prices, which brand do you expect to gain share in the next few months?

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)?


Price: £ 45

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