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1.1 How Does the Food Industry Set Prices?

Last updated over 2 years ago
14 questions
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Lesson Details
The food industry is made up of a collective of diverse businesses that
together make the majority of the food consumed by the world’s population.
How do these businesses decide which items to advertise and how much to charge for each product?
1

What types of food or drink do you see advertised often?
For what types do you see very little advertising? Why do you think this is?

The lines below model the possible relationship between the price and number of customers for two popular supermarket purchases: baby formula and soft drinks.

1

What do you notice about the two graphs? What do you wonder?

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Which customer base, formula or soft drinks, is more swayed by an increase in price? How do you know?

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Do you think it’s a good idea for food companies to always charge more? Explain.

1

Does each equal increase in price change the revenue by a constant amount? Why or why not?

1

The new intern at the company suggests selling the formula for $20. Is this the best price? How do you know?

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The second intern suggests selling the formula for $80. Is this the best price? How do you know?

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If the goal is to make the most money, what is the optimal price for the formula? How do you know?

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At what price(s) will the company make no money on formula? Why?

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When or why might companies use factors besides revenue to determine their prices?