Question

1. Data on price and sales volume in two different periods are given.

Fruits	Price EUR/ kg		Amount of sold fruits (kg)
	In December	In January	In December	In January
Apple	0.65	0.85	400	320
Orange	0.92	0.83	830	770
Pears	1.04	1.15	380	390

Calculate and interpret composite indices and their absolute differences. Was companies’ price politics right? What do you suggest for next month?

Answer 1

Fruits	Price in December	Amount of sold fruit in December	Sales in December	Price in January	Amount of sold fruit in January	Sales in January
Apple	0.65	400	260	0.85	320	272
Orange	0.92	830	763.60	0.83	770	639.10
Pears	1.04	380	395.20	1.15	390	448.50

Fruits	Sales in December	Composite Index	Sales in January	Composite Index	Absolute Difference
Apple	260	18.33%	272	19.24%	0.91%
Orange	763.60	53.82%	693.10	49.03%	4.79%
Pears	395.20	27.85%	448.50	31.73%	3.88%

The Companies price policies of increasing the price of Apples and Pears was correct. It has increased the sales. However, increasing the price of Oranges ha a negative impact. It decreased the sales.

For the next month, the company should decrease the price of Oranges and try to find a point where demand is retained even at a price higher than that of January. For Apples and Pears, the best suggestion is to keep the prices steady. However, increasing the prices a bit further to find out how high it can be until demand begins to fall, is also a good alternative. Decreasing the prices of Apples and Pears or increasing those of Oranges is not recommended