This is from a mircoeconomics class. Please read and answer the whole question.

Question

This is from a mircoeconomics class. Please read and answer the whole question.

We suggested that a grocery store could conduct an experiment to find a demand curve by charging a different price each week for some product.

a.Do you think that technique would be more accurate for a perishable good, such as milk, or for a nonperishable good, such as canned tuna? Why?

b. Do you think the technique would be more accurate if the firm announced the price each week in advance or if it just let customers discover the different prices when they came to the store? Why?

Explanation / Answer

Answer a : The technique would be more effective in case of non perishable good . As perishable good are that which should not be kept for a long time .So there price and marketing are quite sensitive so it better to take experiment related to non perishable goods. These goods are easily stored is there demand decreases due to increase in prices .as transportation and storage is cheaper of non perishable good as compared to perishable goods so it is a better decision to take the experiment on non perishable good.

Answer : The technique that would be more appropriate as they announce of price well in advance so that every couple should know about the about the current price running in the grocery store .It helps the grocery store to determine the actual price of the product at which the demand of non perishable good has been determined.

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