The Campus Bookstore Sells Stadium Blankets Embroidered with the University

question 83

Essay

The campus bookstore sells stadium blankets embroidered with the university crest. The blankets must be purchased in bundles of one dozen each. Each blanket in the bundle costs $65, and will sell for $90. Blankets unsold by homecoming will be clearance priced at $20. The bookstore estimates that demand patterns will follow the table below.
a. Build the decision table.
b. What is the maximum expected value?
c. How many bundles should be purchased?
$$\begin{array} { | l | l | } \hline \text { Demand level } & \text { Probability } \\\hline 1 \text { bundle } & 10 \text { percent } \\\hline 2 \text { bundles } & 30 \text { percent } \\\hline 3 \text { bundles } & 50 \text { percent } \\\hline 4 \text { bundles } & 10 \text { percent } \\\hline\end{array}$$

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Definitions:

Labor Supply Curve

A graphical representation showing the relationship between the number of hours worked by individuals and the wage rate, indicating how many hours they are willing to work at a given wage.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers.

Level of Employment

The total number of people employed in the economy at a given time, reflecting the jobs available and workforce participation.

Monopsonist

A market condition where there is only one buyer facing many sellers, giving the buyer significant control over prices.