A Firm Is Considering a One-Time Sale of $100,000 to a Customer.The

question 27

Multiple Choice

A firm is considering a one-time sale of $100,000 to a customer.The cost of goods sold for this sale is $90,000.If the probability of the customer paying is 0.8, what is the expected profit from this transaction?

• A)Zero
• B)-$10,000
• C)+$8,000
• D)+$10,000 Expected profit = 0.8(100,000 - 90,000) - (1.08)(90,000)

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Definitions:

Additives

Substances added to products, such as food or fuel, to enhance their properties or preserve their quality.

Secretly

The act of keeping something hidden or undisclosed from others.

Enlightened Self-interest

The understanding that actions which appear to benefit others can also indirectly benefit oneself, leading to outcomes that are advantageous for all parties involved.

Classical Economic

A school of thought in economics that emphasizes the importance of free markets, competition, and the self-regulating nature of economies.