If a vendor has correctly used marginal analysis to select its stock levels for the day (as in the newsperson problem in the text), and if the profit resulting from the last unit being sold (C_u) is $0.90 and the loss resulting from that unit if it is not sold (C_o) is $0.50, which of the following is the probability of the last unit being sold? A) Greater than 0.357 B) Greater than 0.400 C) Greater than 0.556 D) Greater than 0.678 E) None of these choices are correct

Question

Quizplus · Accepted Answer

The probability of the last unit being sold is greater than 0.357 because the profit from selling the last unit ($0.90) is greater than the loss from not selling it ($0.50).

If a Vendor Has Correctly Used Marginal Analysis to Select