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However, the most important factor that Papa John’s profitability depends on is not only convenience but price, and how much the consumer has in their pocketbook to spend. Price is a major factor in determining whether one will spend money at Papa John’s or another, cheaper pizza place. Therefore, when it comes to pricing decisions, Papa John’s understanding of the price elasticity of demand and the income elasticity of demand, is vital to ensuring that the company continues to remain profitable.
Price Elasticity of Demand and Pricing Decisions
Price elasticity of demand is a very important concept to understand when setting price levels for items, especially within the food service market...
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