Multiple Choice
Answer the following questions using the information below:
Patrick Ross has three booth rental options at the country fair where he plans to sell his new product.The booth rental options are:
Option 1: $1000 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 maximise 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 one
B) Option two
C) Option three
D) All options maximise income equally.
Correct Answer:
Verified
Correct Answer:
Verified
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