The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Because this seedless watermelon costs $4,will sell for $7,and is highly perishable,he expects only to sell between six and nine of them. What is the opportunity loss for purchasing eight watermelons when the demand is for nine watermelons?
A)0
B)3
C)4
D)6

Question

Quizplus · Accepted Answer

The opportunity loss for purchasing eight watermelons when the demand is for nine is the profit from the one watermelon not sold. Since the watermelon is bought for $4 and sold for $7, the profit per watermelon is $3. Therefore, not selling one watermelon when there is demand results in a $3 opportunity loss.

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