Answer the Following Questions Using the Information Below

question 145

Multiple Choice

Answer the following questions using the information below:
Patrick Ross has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are:
Option 1: $1,000 fixed fee, or
Option 2: $750 fixed fee + 5% of all revenues generated at the fair, or
Option 3: 20% of all revenues generated at the fair.
The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each.
-Which option should Patrick choose to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold?

• A) Option 1
• B) Option 2
• C) Option 3
• D) All options maximize income equally.

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Definitions:

Energetic Current

Refers to a strong, dynamic movement of water, often in the ocean, that can transport sediments and influence marine and coastal processes.

Moving

The act or process of changing location or position.

Lake

A body of water, usually freshwater, surrounded by land and not directly connected to the ocean.

Fluvial

Pertaining to rivers or streams, including the processes, sediment, resulting rock, and landforms.