Suppose You Run a Simulation Model Several Times with Different

question 73

Multiple Choice

Suppose you run a simulation model several times with different order quantities.What can we infer about the the quantity that maximizes the output,the company's profit?

• A)This quantity is the optimal order quantity.
• B)This quantity might be the optimal order quantity,but we also need to consider the company's attitude toward risk.
• C)This is not necessarily the optimal order quantity,because it may have produced the largest profit by luck.
• D)We can't infer anything.

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Definitions:

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a product for which all sellers offer identical products.

Marginal Cost

The cost added by producing one extra item of a product.

Purely Competitive

Another term for pure competition, it refers to a theoretical market structure with a large number of buyers and sellers, homogeneous products, and free entry and exit from the market.