Nicor Company is having a profitable year. Its only product sells to wholesalers for 80 cents a can. Its managers feel that a 60 percent gross margin should be maintained. Its manufacturing costs consist of: material, 50 percent of cost; labor, 40 percent of cost; and overhead, 10 per- cent of cost. Both material and labor costs in- creased 10 percent since last year. Determine the new price per can based on its present pric- ing method. Is it wise to stick with a 60 percent margin if a price increase would mean lost cus- tomers? Answer using graphs and MC-MR analysis. Show a situation where it would be most profitable to

(a) raise price,

(b) leave price alone.

(c) reduce price.