The Owner of a Greenhouse and Nursery Is Considering Whether

question 167

Multiple Choice

The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year respectively, and she plans to grow 1,200 rosebushes each year on this land, what will be the utilization of this land?

• A)0 percent
• B)40 percent
• C)60 percent
• D)67 percent
• E)100 percent

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Definitions:

Overbooking

The practice of selling or booking more of a service than what is actually available, under the assumption that there will be cancellations or no-shows.

Lost Revenue

Revenue that was not earned due to missed opportunities, such as not having enough inventory to meet demand.

Differential Pricing

The strategy of selling the same product to different customers at different prices based on market factors, demand, and customer’s willingness to pay.

Demand Segment

Refers to a group of potential customers who have similar needs and responses to marketing actions, which can shape how products or services are promoted to them.