Page 189 - Microsoft Word - 00 P1 IW Prelims.docx

Answers

(W1) If daily demand is 40 salads, it would be the right decision for the
business to supply 40 salads since the profit of supplying 40 salads
is the highest, i.e. $80.

 If the business decided instead to supply 50 salads, the regret
(opportunity cost) would be the $80 it could have made supplying
40 salads less the $0 it did make supplying 50 salads = $80.

 If the business decided instead to supply 60 salads, the regret
(opportunity cost) would be the $80 it could have made supplying
40 salads less the $80 loss it did make supplying 60 salads = $160.

 If the business decided instead to supply 70 salads, the regret
(opportunity cost) would be the $80 it could have made supplying
40 salads less the $160 loss it did make supplying 70 salads =
$240.

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