What is wrong with the manager calculation

Assignment Help Microeconomics
Reference no: EM131523952

Question: A firm is negotiating with a local club to supply materials for a party. The firm's manager expects to sell 100 large bags of pretzels for $3 each or 300 for $2 each; these two outcomes are judged to be equally likely. The expected number of bags sold is 200 = (100 + 300)/2, and expected price is $2:50 = ($3 + $2)/2. The manager then calculates expected revenue as the expected number sold times the expected price: E(Revenue) = 200($2:50) = $500. What is wrong with the manager's calculation?

Reference no: EM131523952

Questions Cloud

The framework for analyzing the moral foundations : Principalism is the framework for analyzing and comparing the moral foundations of the ethical statements of these health-related professional associations.
Employees is a key employee : Which of the following employees is a key employee for 2016?
Regulation of business relationships : Why is the issue of insolvency an important factor in the regulation of business relationships?
Budget without hurting performance : How the organization Cut Its Budget Without Hurting Performance?
What is wrong with the manager calculation : A firm is negotiating with a local club to supply materials for a party. The firm's manager expects to sell 100 large bags of pretzels for $3 each or 300.
Considered highly compensated : Which of the following people is considered highly compensated for 2016?
Marginal cost-cost of debt and cost of preferred stock : Out of these methods Marginal cost ,Cost of Debt, Cost of Preferred Stock, Cost of Equity, CAPM, Risk-free rate, Dividend Valuation Model,
Board of governors of the federal reserve system : Download the H.10 release Foreign Exchange rates (weekly data available). What has happened to the value of the U.S. dollar relative to the Canadian dollar
Cash flow be under the proposed capital structure of firm : What will Allison’s cash flow be under the proposed capital structure of the firm? Assume she keeps all 200 of her shares

Reviews

Write a Review

 

Microeconomics Questions & Answers

  Weighed prior to beginning the diet

The water diet requires one to drink two cups of water every half hour from when one gets up until one goes to bed, but otherwise allows one to eat whatever one likes. Four adult volunteers agree to test the diet. They are weighed prior to beginning ..

  Suppose that dent carrs long-run total cost of reparing s

suppose that dent carrs long-run total cost of reparing s cars per week is cs 2s2 50. if the price he receives for

  Do results of sample provide sufficient evident to indicate

An article in American Demographics reports that 67% of American adults always vote in presidential elections.5 To test this claim, a random sample of 300 adults was taken, and 192 stated that they always voted in presidential elections. Do the re..

  Consider a constant cost perfectly competitive industry

Consider a constant cost perfectly competitive industry which is initially in long-run equilibrium under current demand conditions. Assume that the number of firms in the industry is fixed at its current level ie: the number of firms cannot be change..

  What is the maximum tax the gov. can impose

John has been in the habit of mowing Willa's lawn each week for $20. John"s opportunity cost is $15, and Willa would be wlling to pay $25 to have her lawn mowed.

  A very simple ten-digit electronic calculator sold

What"s wrong with this way of thinking? “Economists argue that lower prices will result in fewer units being supplied. However, there are exceptions to this rule. For example, in 1972

  Compute the fitted values and residuals for each observation

Compute the fitted values and residuals for each observation, and verify that the residuals (approximately) sum to zero.

  What price will you charge the youngsters

How would your answers to part c above change, if you could still use a TPT strategy but you could not discriminate between the customers?

  What clams have been made with in the last five years

What clams have been made with in the last five years? Have all claims been resolved, if not what is the status. Has the Company made any claims? Are there presently any pending claims related to any of the Company's intellectual properties/.

  What is the average variable cost

Does price equal or exceed average variable cost for the first 50 units? What is the average variable cost for the first 50 units? Does price equal or exceed average variable cost for the first 100 units? What is the average variable cost for the..

  Explain marginal costs or marginal revenues

What marginal costs does University of Phoenix incur in offering one more ECO/561 class. what marginal revenues does University of Phoenix earn from each additional ECO/561 class.

  What is the breakeven point in units of production

In your own words, describe the life-cycle cost concept. Why is the potential for achieving life-cycle cost savings greatest in the acquisition phase.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd