17-4 Your company has a customer who is shutting down a production line, and it is your responsibility to dispose if the extrusion machine. The compnay could keep it inventory fir a possible future product and estimates that the reservation value is $250,000. Your dealings on the second market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.25 chance the buyer will $350,000, 0.1 chance the buyer will pay $400,000, and a 0.25 chance it will not sell. If you must commit to a posted price what price maximizes profits?
17-4 Your company has a customer who is shutting down a production line, and it is your responsibility to dispose if the extrusion machine. The compnay could keep it inventory fir a possible future product and estimates that the reservation value is $250,000. Your dealings on the second market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.25 chance the buyer will $350,000, 0.1 chance the buyer will pay $400,000, and a 0.25 chance it will not sell. If you must commit to a posted price what price maximizes profits?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 17.4IP
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17-4 Your company has a customer who is shutting down a production line, and it is your responsibility to dispose if the extrusion machine. The compnay could keep it inventory fir a possible future product and estimates that the reservation value is $250,000. Your dealings on the second market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.25 chance the buyer will $350,000, 0.1 chance the buyer will pay $400,000, and a 0.25 chance it will not sell. If you must commit to a posted
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