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 six and nine of them. What is the payoff value for the purchase of eight watermelons when the demand is for eight or more watermelons?
A) 17
B) 21
C) 24
D) 10

Question

Quizplus · Accepted Answer

The payoff value is calculated as the difference between the selling price and the cost of the watermelons. In this case, the selling price is $7 per watermelon and the cost is $4 per watermelon. If the demand is for eight or more watermelons, then the manager will sell all eight watermelons. Therefore, the payoff value is (8 * $7) - (8 * $4) = $24.

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