An Apple Farmer Must Decide How Many Apples to Harvest

question 43

Multiple Choice

An apple farmer must decide how many apples to harvest for the world apple market.He knows that there is a one-third probability that the world price will be $1,a one-third probability that it will be $1.50,and a one-third probability that it will be $2.His cost function is C(Q) = 0.01Q².The farmer's maximum expected profit is:

• A) −$7.75.
• B) $0.
• C) $7.75.
• D) None of the answers are correct.

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Definitions:

Probability Sampling

A sampling technique that ensures every member of a population has a known and equal chance of being selected for the sample.

Virtual Modeling

The use of computer simulations and digital models to create a virtual representation of a product, environment, or set of conditions.

Information Technology

The use of computers, telecommunications, and other devices to store, retrieve, transmit, and manipulate data, often in the context of business operations.

External Data Sources

These are sources of data that originate outside of the organization and can include public data sets, purchased data, or data shared by partners.