The Manager of Paul's Fruit and Vegetable Store Is Considering

question 45

Multiple Choice

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Because this seedless watermelon costs $4,will sell for $7,and is highly perishable,he expects only to sell between six and nine of them. What is the payoff value for the purchase of eight watermelons when the demand is for seven watermelons?

• A)10
• B)17
• C)24
• D)21

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Definitions:

Highest Valued Uses

Refers to allocating resources or goods in a manner that maximizes utility or benefits for an individual or society.

Economic Profits

Profits exceeding the total opportunity costs of all resources used in production; also known as abnormal or supernormal profits.

Hired Managers

Individuals employed to direct and control the operations, strategies, and policies of a business or organization.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production.