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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?
Could you explain the "interest rate effect" in terms of the slope of a curve?
Foreign Institutional Investment: Foreign investment flows in the balance of payments (BOP) comprise FDI flows and portfolio flows. The latter consists of resources mobilis
Can you think of examples where the government does not intervene enough when it comes to consumer safety and product information? Examples where too much intervention is the case
1. In December 1979 it was possible to buy a January 1980 contract in gold at the New York Commodity Exchange for $487.50 per ounce and sell an October 1981 contract for $614.80 on
The supply equation for widgets is P = 100 + 10QS. The elasticity of supply between quantity supplied of 9 and 11?
Function given: Qt=A0Lt^6Kt^4, Lt=L0e^.03t, Kt=K0e^.02t 1. Growth of labor is continuously compounded at 3% 2. Growth of Capital is continuously compounded at 2% Solve:
State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni
A brewery produces two kinds of beer, stout and IPA . Each batch of stout sells for $60 per unit while each batch of IPA sells for $108. Both products require malt, hops, barley, f
different between money multplier vs credit multplier ?
Explain the apparent paradox that saving money is good for the individual but might be bad for the economy. Considering the circular flow diagram how is this relevant to public pol
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