The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between 6 and 9 of them. What is the opportunity loss for purchasing 8 watermelons when the demand is for 8 watermelons?
A) 0
B) 3
C) 4
D) 6

Question

Quizplus · Accepted Answer

The opportunity loss is the cost of not being able to sell a product at its highest potential. If the demand is for 8 watermelons and the store purchases 8, there is no opportunity loss because the store will be able to sell all 8 at $7 each, making a profit of $24 ($56 - $32). Therefore, the best choice is to purchase 8 watermelons.

The Manager of Paul's Fruit and Vegetable Store Is Considering