Pricing with elastic demand Sunny Valley Orchards is reevaluating the pricing of its fresh-squeezed orange juice in half-gallon containers. Variable costs per half-gallon container of fresh-squeezed orange juice are \(\$ 1.50\). Based on Sunny Valley's market study, the management has determined that the price per half gallon should be between \(\$ 2.50\) and \(\$ 3\). Management knows from past experience that demand is affected by price and estimates the demands shown in the following table for prices between \(\$ 2.50\) and \(\$ 3\). Considering only prices in increments of 5 cents, which price should Sunny Valley choose to maximize its contribution margin from sales of half-gallon fresh-squeezed orange juice?

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PRICE PER HALF GALLON $2.50 ESTIMATED DEMAND (HALF-GALLON UNITS) AT GIVEN PRICE 75,000 2.55 72,500 2.60 70,000 2.65 67,500 2.70 65,000 2.75 62,500 2.80 60,000 2.85 57,500 2.90 55,000 2.95 52,500 3.00 50,000