PowerPoint PresentationBasic FactsAssignmentDataQuestionsQuestion 3 - ElasticitiesQuestion 4 - profitQuestion 5 - RecommendationsDAVE’S TRUCK STOPCoaching NotesBUS 302Basic Facts•Basic Products–Diesel (truckers)–Gasoline (tourists - seasonal)–Meals •Pricing–Diesel – marked up 1cent per gallon–Gasoline – marked up 1.5 cents per gallon–Meals – average ticket = $12.55Assignment•Business Report–This is a report to Dave’s management.•What do you recommend they do?•What is going well?•What can be improved?•How should they price?•Memo–Pros and cons of accepting a profit participation agreementData•Data is available at:–http://www.csun.edu/bus302/Course/Materials.html–While you are asked some specific questions, be aware that the data given holds a wealth of information.•Numbers given are in nominal terms•The appropriate price index for use in determining real values is the CPI. This is given in the data set.Questions•Question 1 – profits over time.–It might be useful to plot real profits over time.•Question 2 – fuel and meal sales demand, three simple regressions.–Own price elasticity = -(% change in Q/% change in Own Price) Number should be calculated at the mean sales quantity.Question 3 - Elasticities•The impact of price changes on revenues is linked to the price elasticity of demand.–Is the estimate you have made for the firm or for the market?•The relationship between fuel prices and meals is a cross elasticity of demand. You are looking for the % change in quantity/% change in other price (again calculated at the mean quantity).Question 4 - profit•How do additional gasoline (diesel) sales add to profits?–Added gasoline (diesel) revenue?–Added meals?Question 5 - Recommendations•Recommendations–Gasoline pricing–Diesel pricing–Meals–Other considerations–How does each activity add to or detract from
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