If a Vendor Has Correctly Used Marginal Analysis to Select

question 47

Multiple Choice

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem) , and the profit resulting from the last unit being sold (C_u) is $0.90 and the loss resulting from that unit if it is not sold (C_o) is $0.50, which of the following is the probability of the last unit being sold?

• A) Greater than 0.357
• B) Greater than 0.400
• C) Greater than 0.556
• D) Greater than 0.678
• E) None of these

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.

Retained Earnings

Retained earnings are the accumulated net profits that a company chooses to keep rather than distribute to shareholders as dividends, often reinvested in the business.

Deficit

The shortfall that occurs when expenses exceed income or revenues.

IFRS

International Financial Reporting Standards, a set of accounting standards for financial reporting that is accepted globally.