What is the expected value for the optimum decision alternative?
A)50,000 copies
B)40,000 copies
C)32,000 copies
D)30,500 copies
E)10,500 copies

Question

Quizplus · Accepted Answer

Based on the expected value calculations, the option that maximizes profit is to print 32,000 copies. Any higher quantity reduces the profit due to higher fixed costs, while any lower quantity reduces the profit due to lower revenue from advertising.

What Is the Expected Value for the Optimum Decision Alternative