Economics Homework Help

For this question, refer to the article “The Inside Story of Wawa” found here: https://www.inc.com/magazine/201806/maria-aspan/wawa-convenience-store-pennsylvania.html and also posted on Problem Set 8 assignment page on Blackboard.

A.The manager of a newly opened store asks you to advise her on an optimal pricing scheme for specialty sandwiches, signature fountain drinks and combination packages of sandwiches and drinks. Market research reveals that the market size for the newly opened facility is about one million consumers of four types who can be classified as follows:

S: Have a strong preference for Wawa’s signature sandwiches

F: Have a strong preference for Wawa’s signature fountain drinks

SF: Like to buy sandwiches and drinks as a combination

NP: Have no preference for either product; stop in at Wawa and buy eats occasionally

Assume that the population is evenly distributed; 25% of the consumers fall into each buying group. The maximum each group will pay for the products is given in the following table.

Group	Sandwich	Drink
S	8	3
F	4	6
SF	8	4
NP	3	2

Given the information above, what is the optimal sandwich price, the optimal drink price and the optimal combination price (sandwich and drink sold together)?

As part of your answer for this section, provide some examples of how Wawa uses pricing strategy as part of its store operations

B. Use Michael Porter’s Five Forces framework to explain how Wawa applies economic concepts to business strategy. As a directed requirement, for power of suppliers, make labor one of the inputs you analyze. How does Wawa structure compensation and align incentives to control cost and achieve company objectives?