Question

decision point: finding the right price
youve invested a lot in moondogs -- now you need to find the right price to charge for your coffee. it has to be low enough to attract business, but high enough to ensure you make a profit. whats a good step in figuring out the right price?
select an option from the choices below and click submit.

• use the principles of supply and demand to determine the market (or equilibrium) price.
• run an online survey of students to determine what price they would like to pay.
• visit several shops that sell coffee near campus to see what prices they charge, and then use the average of those prices to set the price you will charge.

Explanation:

To determine the right price for coffee, using supply and demand principles (equilibrium price) is ideal. It balances attracting customers (demand) and ensuring profit (considering supply/costs). A student survey only reflects desired prices (not market reality), and averaging competitors’ prices ignores own costs/supply - side factors. Supply - demand analysis considers market dynamics for a sustainable price.

Answer:

A. Use the principles of supply and demand to determine the market (or equilibrium) price.