TABLE 17-2
The following payoff matrix is given in dollars.
$$\begin{array} { c c l }
& { \text { Action } } \
\text { Event } & A & B \
\hline 1 & 400 & 700 \
2 & 200 & 500
\end{array}$$
-Blossom's Flowers purchases roses for sale for Valentine's Day. The roses are purchased for $10 a dozen and are sold for $20 a dozen. Any roses not sold on Valentine's Day can be sold for $5 per dozen. The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen roses. What is the opportunity loss for buying 400 dozen roses and selling 200 dozen roses at the full price?
A) $1,000
B) - $2,000
C) $0
D) $500

Question

TABLE 17-2
The following payoff matrix is given in dollars.
$$\begin{array} { c c l } 
& { \text { Action } } \
\text { Event } & A & B \
\hline 1 & 400 & 700 \
2 & 200 & 500
\end{array}$$
-Blossom's Flowers purchases roses for sale for Valentine's Day. The roses are purchased for $10 a dozen and are sold for $20 a dozen. Any roses not sold on Valentine's Day can be sold for $5 per dozen. The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen roses. What is the opportunity loss for buying 400 dozen roses and selling 200 dozen roses at the full price?
A) $1,000
B) - $2,000
C) $0
D) $500

Quizplus · Accepted Answer

The opportunity loss is the difference between the payoff of the best action and the payoff of the action that was taken. In this case, the best action is to buy 200 dozen roses and sell them all at the full price, which would result in a payoff of $4,000. The action that was taken was to buy 400 dozen roses and sell 200 dozen roses at the full price, which resulted in a payoff of $3,000. Therefore, the opportunity loss is $4,000 - $3,000 = $1,000.

TABLE 17-2 the Following Payoff Matrix Is Given in Dollars Action Event AB14007002200500\begin{array} { c c l } & { \text { Action } } \\\text { Event } & A & B \\\hline 1 & 400 & 700 \\2 & 200 & 500\end{array} Event 12​ Action A400200​B700500​​

TABLE 17-2
the Following Payoff Matrix Is Given in Dollars $\begin{array} { c c l } & { \text { Action } } \\\text { Event } & A & B \\\hline 1 & 400 & 700 \\2 & 200 & 500\end{array}$