Question

americans eat some 9 billion chickens a year but not the feet. but thanks to the huge demand in​ china, chicken feet are now a huge profit center. perdue sells some​ $40 million of the otherwise valueless​ by-product to china annually. this is an example of​ ________ pricing.

Answer 1

This is an example of export pricing. Perdue sells chicken feet to China, which generates significant profit from a by-product that is not commonly consumed in the US.

Step-by-step explanation:

This is an example of export pricing.

Export pricing refers to the practice of setting prices for products that are sold in international markets. In this case, Perdue sells chicken feet, a by-product that is not commonly consumed in the US, to China where there is a high demand for this product. By selling the chicken feet to China, Perdue is able to generate significant profit from an otherwise valueless by-product.

Perdue's annual sales of $40 million of chicken feet to China showcases how exporting niche products or by-products can be a lucrative revenue stream for companies.

Answer 2

Perdue's sale of chicken feet to China, which are highly demanded there but not in the U.S., is an example of arbitrage pricing, where price differences in separate markets are exploited for profit. This is part of a broader trend of adapting to shifts in consumer preferences and market demands, both domestically and internationally.

Step-by-step explanation:

The case of Perdue selling chicken feet, a by-product considered valueless in the American market, to China where there is a huge demand, demonstrates an example of arbitrage pricing. This concept in business highlights how a company can exploit the price difference of an item between two markets. Perdue finds profit in a product that would otherwise be discarded by leveraging on the high demand for chicken feet in the Chinese market, effectively diversifying its revenue.

Movements in consumer tastes, such as the increased American preference for chicken over beef, as evidenced by USDA data showing an increase in per-person chicken consumption from 48 pounds to 85 pounds between 1980 and 2014, can cause shifts in the demand curve. This change also leads to new market opportunities on the global scale, as products unpopular or unused in one region can be in high demand in another, thus creating a scenario for arbitrage. For both the US economy and the global market, responding to these shifts in demand and supply can be crucial for business profitability.

Changing diets and menu offerings in response to seasonal fluctuations in food prices show similar market adaptations without significant disruption. Companies like Perdue have applied this adaptive approach to international markets with products like chicken feet.