Question

While there are many pizza places in Kutztown, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Momma’s must ________ prices to increase total revenue. Group of answer choices:a. lower; raise b. lower; lower c. raise; raise d. raise; lower e. raise; not change

Answer 1

Correct option is (d)

Step-by-step explanation:

Pappy's pizza has an edge over its competitors for its pizza is distinct and has pie like crust. People will demand Pappy's pizza irrespective its price as there are no alternatives available in the market. So, if Pappy pizza wants to increase its total revenue, it needs to raise prices.

Momma's pizza, on the other hand does not sell unique product. The pizza is similar to any other pizza available in the market. If it raises price of the pizza, people will move to next best alternative available in the market. As such, if it needs to increase total revenue, then it should lower its prices.