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 opportunity loss for purchasing six watermelons when the demand is for eight watermelons?
A)0
B)3
C)4
D)6

Question

Quizplus · Accepted Answer

The opportunity loss is the profit lost from not meeting demand. If demand is for eight watermelons and only six are purchased, two sales are lost. Each sale would have made a profit of $3 ($7 selling price - $4 cost), so the opportunity loss is 2 x $3 = $6.

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