Microeconomics: Theory and Applications with Calculus, 4e

12 Pricing and Advertising

Everything is worth what its purchaser will pay for it.

—Publilius Syrus (first century BC)

CHALLENGE Sale Price

Because many firms use sales—temporarily setting the price below the usual price—some customers pay lower prices than others over time. Grocery stores are particularly likely to put products on sale frequently. In large U.S. supermarkets, a soft drink brand is on sale 94% of the time. Either Coke or Pepsi is on sale half the weeks in a year.

Heinz Ketchup controlled 62% of the U.S. market in 2015. Its market share is 70% in Canada, and nearly 80% in the United Kingdom. Kraft Heinz Co. sells over 650 million bottles of ketchup in more than 140 countries and had annual sales of more than $1.5 billion. When ...