The Above Table Shows the Probability Distribution of Cake Sales

question 85

Multiple Choice

The above table shows the probability distribution of cake sales at Busy Betty's Bakery.
-Refer to the table above. Busy Betty sells her cakes for $20 each and her constant marginal cost to produce each cake is $12, which is equal to her (constant) average total cost. If she does not sell a cake the day she makes it, she sells it as day- old cake for $10. What is her expected marginal cost of holding the 23rd cake in inventory?

• A)$1.20
• B)$6.60
• C)$0.40
• D)$2.00

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Definitions:

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