Question

Peggy sells pistachios and almonds at the farmer’s market. She currently prices pistachios at $7 per bag and almonds at $4 per bag. She observes that every hour, 4 people each buy one bag of pistachios and 2 people each buy one bag of almonds. Having surveyed them, she learns that 2 of the pistachio buyers would be willing to pay $2 for the bag of almonds while the other two would only be willing to pay $1. Both almond buyers would be willing pay $5 for the bag of pistachios. Suppose Peggy decides to sell a bundle containing one bag of pistachios and one bag of almonds in addition to selling them separately. What price should she charge for the bundle in order to maximize revenue?

Answer 1

The price she should charge for the bundle in order to maximize profit is 9

Step-by-step explanation:

Solution

The total pistachios sold = 7 * 2 =14

The total almonds sold is = 4*1 = 4

So,

The total of both pistachios and almonds = 14 + 4 + 18

Thus,

we solve for getting average of the two which is:

Getting the average of the two in the bundle = 18/2

=9

Therefore p =9