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Suppose 5% of the People Who Buy a Certain Type

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Suppose 5% of the people who buy a certain type of DVD player return it to get their money back.The DVD player costs $100.What is the expected loss, per customer, for the company due to returns (ignoring the monetary value of the returned DVD player) ?


Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Actual Price

The price at which a good or service is sold, not considering discounts or adjustments.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount that they actually pay.

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