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Graph showing the Demand for Peanut Butter

Mr. PB's grocery store has 400 jars of peanut butter it needs to sell by Friday. Mr. PB's current selling price for peanut butter is $1.00 per jar. What would you advise Mr. PB to do?

(1 point)
Responses

Reduce the price of peanut butter to $0.80 per jar at least until Friday.
Reduce the price of peanut butter to $0.80 per jar at least until Friday.

Remove all advertisement from peanut butter to shift demand to the left.
Remove all advertisement from peanut butter to shift demand to the left.

Continue selling peanut butter at it's current price since demand for peanut butter is elastic.
Continue selling peanut butter at it's current price since demand for peanut butter is elastic.

Put peanut butter on sale for $0.40 per jar.

1 answer

To advise Mr. PB on how to sell the 400 jars of peanut butter by Friday, we should consider the elasticity of demand and how price changes might affect sales.

  1. Reducing the price to $0.80 per jar - This option generally makes sense if demand is elastic; reducing the price can increase quantity demanded, helping Mr. PB reach his sales goal.

  2. Removing all advertisements - This would likely shift demand to the left, meaning fewer customers would be interested in purchasing peanut butter, which is counterproductive when trying to sell the remaining inventory.

  3. Continuing to sell at the current price - If demand is elastic, he might not be able to sell the 400 jars at $1.00 as consumers could be sensitive to price changes.

  4. Putting peanut butter on sale for $0.40 per jar - This steep reduction could lead to very high demand, potentially selling out quickly. However, it greatly reduces profit margins.

Given these options, reducing the price to $0.80 per jar at least until Friday seems like the most reasonable choice. It balances encouraging sales without heavily sacrificing the price.

So I would recommend: Reduce the price of peanut butter to $0.80 per jar at least until Friday.