Question

Pisa​ Pizza, a seller of frozen​ pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of the new pizza will be $ 22 million per year. While many of these sales will be to new​ customers, Pisa Pizza estimates that 50 % will come from customers who switch to the​ new, healthier pizza instead of buying the original version.

a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new​ pizza?

The incremental sales associated with introducing the new pizza will be ​$_____million.  ​(Round to two decimal​ places.)

b. Suppose that 48 % of the customers who will switch from Pisa​ Pizza's original pizza to its healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this​ case?

If 48 %of the customers who will switch from Pisa​ Pizza's original pizza to its healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier​ pizza, then the incremental sales will be ​$_____million. (Round to two decimal​ places.)

Answer 1

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