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Unformatted text preview: ll Street Journal recently reported that westerners often describe its distinctive sulphurous
smell with words like stinky socks and manure. However, the durian is so popular in Thailand that
one variety of the durian fruit, called the Kan Yao, has been selling for as high as $200. Even at
that price, supply of the Kan Yao cannot keep up with demand. There are approximately 30
varieties of the durian grown in Thailand, with the most plentiful selling in the $15 range. The
yellow flesh of the durian, the part you eat, has very powerful smell but possesses a sweet, nutty
taste that Thais cannot seem to get enough of at any price.
124. Refer to Smelly Fruit. If it cost a Thai farmer $100 to produce and $25 to market the Kan Yao
durian that she sells for $200 at the marketplace, her revenue, for each durian sold, would be:
Revenue is the price charged to customers. PTS: 1
KEY: CB&E Model Pricing OBJ: 19-1
TOP: AACSB Analytic
MSC: BLOOMS Analysis 125. Refer to Smelly Fruit. Suppose that a Thai farmer sells ten Kan Yao durians in the marketplace at
the going rate of $200 each. If it cost a Thai farmer $125 to produce and market the Kan Yao
durian that she has sold, the difference between these two numbers ($75), times the number sold
(ten), represents the farmer’s:
What’s left over after covering all costs would be the farmer’s profit.
KEY: CB&E Model Pricing OBJ: 19-1 TOP: AACSB Reflective MSC: BLOOMS Application 126. Refer to Smelly Fruit. Suppose that you have decided to buy land in Thailand and become a
durian producer. You see that the customary price for a Kan Yao is $200, so that is the price you
decide to charge for your durian crop. This suggests you are using a _____ approach to setting
return on investment (ROI)
Status quo pricing seeks to maintain existing prices or to meet competition’s price.
KEY: CB&E Model Pricing OBJ: 19-2 TOP: AACSB Reflective MSC: BLOOMS Application 127. Refer to Smelly Fruit. At $200 per Kan Yao, demand for the fruit appears to be higher than
supply. Suppose that at a price of $225, the amount demanded exactly meets the amount farmers
are willing and able to supply. In this case, the $225 price would be considered the _____ price.
When demand and supply are equal, you have met the price equilibrium price. PTS: 1
KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application 128. Refer to Smelly Fruit. Over the past two years, the price for Kan Yao durian fruit has increased by
50 percent. If the amount sold has remained almost constant, we would say that demand is:
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This document was uploaded on 09/29/2013.
- Fall '13