Question

Due to arduous certification requirements, Nature’s Crunch is currently the only certified organic produce grower in a region that produces lots of non-organic produce alternatives. From a profit-maximizing perspective, would it be better for Nature’s Crunch to lobby the government to relax organic certification requirements or to require grocery stores to clearly label its produce as organic?

Answer 1

Answer: To maximize profit, It would be better for Nature's Crunch to ask grocery stores that sell its produce to clearly label it as organic.

Explanation:

Profit maximization involves an organization trying to increase its profit margin by either increasing sales of its products or reducing costs (which could be costs of producing or distributing its products), or even doing both.

Profit = Sales - Cost

In this case, Nature's Crunch already has an advantage over other competing companies as it is the only certified organic produce grower in its region.

If Nature's Crunch lobbies the government to relax the requirements to get organic produce certification, then it becomes easier also, for other companies (competitors) to get the necessary certification to make organic produce and this will increase competition.

Instead, Nature's Crunch should ask grocery stores to clearly label its produce as organic so when whenever customers in the region need organic produce, they will only buy Nature's Crunch produce. This will increase sales for Nature's Crunch and also lead to increase in profit.