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Suppose that a grocery store buys milk for $2.10 and sells it for $2.60. If the milk gets old then the grocery store can sell their unsold milk back to their wholesaler for $0.60 (so the grocery store loses $1.50 on each gallon that it has to sell back to the wholesaler). Suppose that the demand for milk is normally distributed with a mean of 2500 gallons per week and a standard deviation of 400 gallons per week. The grocery store needs to decide how much milk to order. They decide that they want to order an amount of milk such that their expected profit on the last gallon sold is 0. Therefore, if p denotes the probability of selling a gallon of milk (notice that the probability of selling a gallon of milk is related to the number of gallons of milk because the demand for milk is normally distributed) then the expected profit is p (.50) + (1-p) (-1.50). If we set this equal to 0 and solve for p then we get p = .75. Therefore, if the grocery store's goal is to maximize its expected profit then they should order an amount of milk such that the probability of selling that amount of milk (or more) is 75%. How many gallons of milk should the store order?
Determine in detail about money supply of Central bank The central bank will not pay cash when it buys government securities. Instead, it will ask the seller's bank to credit t
If population growth is greater than the growth of real output, A. real per capita Gross Domestic Product (GDP) growth will be less than the growth of real Gross Domestic Product
what is automatic stabilizer, example with diagram or graph please
discuss different forms of foreign exchange regimes
Select a particular public policy with which you are familiar and discuss two positive and two negative aspects of that policy. b. What goal do you think the policy makers were try
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The Pigou effect: A) suggests that as prices fall and real money balances rise, consumers should feel less wealthy and spend less. B) suggests that as prices fall and real mo
Problem >> Explore the relationship between Artificial intelligence and Neural networks. The systems which use this type of intelligence are known as artificial intelligent
Your firm usually uses about 200-300 tons of steel per year. Last year, you purchased 100 tons of steel than needed (at a price of $200 per ton) In the meantime, the price of steel
This 24 year 1 quarter period should offer sufficient insight into the short term and long term correlation between the variables. Figure - A graph showing the trend of
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