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 nine watermelons when the demand is for six watermelons?
A) 6
B) 13
C) 20
D) 27

Question

Quizplus · Accepted Answer

The payoff value is calculated as the revenue from selling six watermelons minus the cost of purchasing nine watermelons. Revenue from selling six watermelons is 6 x $7 = $42. The cost of purchasing nine watermelons is 9 x $4 = $36. The payoff value is $42 - $36 = $6.

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