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

Question

Quizplus · Accepted Answer

Opportunity loss is the difference between the profit earned from the best decision and the profit earned from the actual decision. In this case, if the demand is for six watermelons, and the manager purchases six, then there is no opportunity loss since he will sell all six and make a profit of $18 (6 x $3 profit per watermelon). Therefore, the best choice would be to purchase six watermelons, and there would be no opportunity loss.

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