A Retailer Is Deciding How Many of a Certain Product

question 33

Multiple Choice

A retailer is deciding how many of a certain product to stock. The historical probability distribution of sales for this product is 0 units, 0.2; 1 unit, 0.3; 2 units, 0.4, and 3 units, 0.1. The product costs $8 per unit and sells for $25 per unit. The conditional value for the decision alternative "Stock 3" and state of nature "Sell 1" is

• A) 1.4 units.
• B) $1 profit.
• C) $25 profit.
• D) $-8 profit.
• E) 25 units.

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Definitions:

Negative Emotional State

A condition of experiencing feelings such as sadness, anxiety, or anger, which negatively affects one's mood and disposition.

Freedom

The power or right to act, speak, or think as one wants without hindrance or restraint.

Self-Image

How a person sees themselves, which can encompass self-esteem, physical appearance, and personal beliefs and attitudes.

Psychological Reactance

An emotional reaction in direct contradiction to rules or regulations that threaten or eliminate specific behavioral freedoms.