If a Vendor Has Correctly Used Marginal Analysis to Select

question 78

Multiple Choice

If a vendor has correctly used marginal analysis to select its stock levels for the day (as in the newsperson problem in the text) , and if 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:

Oligopolist

A market participant in an oligopoly, a market structure dominated by a small number of large firms, influencing pricing and competition.

Cartel

An association of independent businesses organized to control production, pricing, and marketing of goods to limit competition.

Competitors

Entities or firms in the same industry or market that offer similar goods or services to consumers.

Herfindahl-Hirschman Index

A measure of market concentration used to determine the level of competition within an industry, calculated by summing the squares of the market shares of each firm within the sector.