The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Because this seedless watermelon costs $4,will sell for $7,and is highly perishable,he expects only to sell between six and nine of them. What is the payoff value for the purchase of eight watermelons when the demand is for six watermelons?
A)17
B)21
C)24
D)10

Question

Quizplus · Accepted Answer

The payoff value is calculated by considering the cost and revenue. If 8 watermelons are purchased and only 6 are sold, the revenue is 6 x $7 = $42. The cost for 8 watermelons is 8 x $4 = $32. The payoff is $42 - $32 = $10.

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