Chapter 7 exercise

There are 4 fresh milk brands in the Vietnam milk market including Vinamilk, TH Milk, Ba Vi Milk, and
Moc Chau Milk. The following table summarizes the performance of each brand in the market in
2022:

Fresh milk brands Unit sales (liter) Price (per liter) Numeric distribution
(sales points)
Vinamilk 50 mil 120,000 VND 800
TH Milk 60 mil 150,000 VND 900
Ba Vi Milk 30 mil 100,000 VND 500
Moc Chau Milk 20 mil 80,000 VND 400

The following table summarizes the performance of each category of fresh milk in 2022:

Fresh milk categories Unit sales (liter) Price (per liter)

No sugar 40 mil 110,000 VND
Sweetened 10 mil 100,000 VND
Less sweetened 70 mil 130,000 VND
Skimmed 40 mil 130,000 VND

Total number of sale points for fresh milk across Vietnam is 1000 based on 2022 statistics.
Question 1: Calculate the Price Premium of Vinamilk based on Average Price paid, Average Price
charged, and Average Price displayed for 2022.
Vinamilk follows a linear demand function. At the early of 2023, Vinamilk reduces the price to 110,000
VND to gain better competive advantages. This helps raise total sales by 5 mil. liter in 2023 for the
brand. Unfortunately, in the early of 2024, all the remaining competitors reduce their price by 10% as
their strategic responses. It is estimated that these competitors’ moves will cause sales loss of 8 mil
in . liter for Vinamilk in 2024 as compared to sales of 2023.
Question 2: Calculate price elasticity for Vinamilk.
Question 3: Calculate residual price elasticity for Vinamilk
A customer survey shows that from price of 200,000 VND per liter and above, there is no customer
who is willing to buy Vinamilk fresh milk.
Question 4: Given that variable cost of producing each liter of fresh milk is 60,000 VND, what is
optimal price for Vinamilk?
Question 5: What is percent of good value at the price of 200,000 VND per liter?