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 6 and 9 of them. What is the payoff value for the purchase of 7 watermelons when the demand is for 6 watermelons?
A) 14
B) 18
C) 21
D) 24

Question

Quizplus · Accepted Answer

The payoff value is calculated by subtracting the cost from the revenue. If 7 watermelons are purchased and only 6 are sold, the revenue is 6 x $7 = $42. The cost for 7 watermelons is 7 x $4 = $28. The payoff is $42 - $28 = $14.

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