Consider the Pricing Strategy Outlined in the Following Excerpt About

question 90

Multiple Choice

Consider the pricing strategy outlined in the following excerpt about a "smart" vending machine and use it to answer the following questions:
Taking full advantage of the law of supply and demand,the Coca-Cola Company has quietly begun testing a vending machine that can automatically raise prices for its drinks in hot weather."This technology is something the Coca-Cola Company has been looking at for more than a year," said Rob Baskin,a company spokesman,adding that it had not yet been placed in any consumer market....The process appears to be done simply through a temperature sensor and a computer chip,not any breakthrough technology,though Coca-Cola refused to provide any details yesterday.While the concept might seem unfair to a thirsty person,it essentially extends to another industry what has become the practice for airlines and other companies that sell products and services to consumers.The falling price of computer chips and the increasing ease of connecting to the Internet has made it practical for companies to pair daily and hourly fluctuations in demand with fluctuations in price-even if the product is a can of soda that sells for just 75 cents.

-If the "smart vending machine" described in the excerpt were available today on a 100-degree day in Atlanta,Georgia,Coca-Cola would be purchased by the

• A) person with the most price-inelastic demand for cola.
• B) person with the most elastic demand for cola.
• C) firm with the most inelastic supply of cola.
• D) firm with the most elastic supply of cola.
• E) person with a low reservation price.

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