New Microsoft Word Document

New Microsoft Word Document - Name: Bao Dang ID:...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Name: Bao Dang ID: 16-867-4989 Sara Lee and the Elasticity of Food Market According to The Wall Street Journal on February 9, 2011, Sara Lee Corp., a food maker, is facing cost pressures. In order to offset the high costs of raw materials such as coffee and high protein, Sara Lee is planning to increase prices of coffee and other items, even after 3.1% increases in the latest quarter. However, the company fails to keep its revenue when sales volumes fall dramatically. The company fails when it ignores an important factor of the food market, the elasticity. The attempt to increase prices fails because the food market is elastic. Sara Lee increases the price of coffee and other items over 3.1% with the hope to keep its revenue and profit. This attempt would succeed if the demands of its products were inelastic; increasing in prices would decrease just a very small amount of quantity demanded, which is sales volume of Sara Lee. Therefore, Sara Lee could keep or increase its revenue. However, in fact, even though sales
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

New Microsoft Word Document - Name: Bao Dang ID:...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online