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As you know we are the only gourmet nut producer in town. Right now we are...

As you know we are the only gourmet nut producer in town. Right now we are charging a price of $5 per bag for both our cinnamon roasted almonds and our cinnamon roasted pecans, no matter which brand is more popular. However, we have noticed that demand for the pecans is five times as high as demand for almonds.

In an effort to increase our profits we are thinking about raising prices by 30% for our cinnamon roasted pecans. Since demand for these nuts is five times as high as for the almonds, we think the market can absorb the price increase.

Our sales department has supplied us with the following two estimates of total yearly demand for pecans:


QPecans= 3000-150 PPecans

QAlmonds= 1200-150 PAlmonds

The sales department has also informed us that our costs are $2 per bag, independent of type of nut. Please review our current pricing strategy and let us know if a price hike for pecans is feasible.

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