OJ\'s Orange Juice produces orange juice to sell in competitive market. Given un
ID: 1099320 • Letter: O
Question
OJ's Orange Juice produces orange juice to sell in competitive market. Given uncertainty in weather patterns, OJ has to determine how much juice to produce prior to knowing the competitive price. It is estimated that the competitive price will be $5 with 10 percent chance and a 90 percent chance the price will be $2. If the marginal cost of producing orange juice is MC(Q) = 2Q, then to maximize expected profits, OJ should produce Select one: a. 0.25 units. b. 0.9 units. c. 2.5 units. d. 1.15 units. OJ's Orange Juice produces orange juice to sell in competitive market. Given uncertainty in weather patterns, OJ has to determine how much juice to produce prior to knowing the competitive price. It is estimated that the competitive price will be $5 with 10 percent chance and a 90 percent chance the price will be $2. If the marginal cost of producing orange juice is MC(Q) = 2Q, then to maximize expected profits, OJ should produce Select one: a. 0.25 units. b. 0.9 units. c. 2.5 units. d. 1.15 units. Select one: a. 0.25 units. b. 0.9 units. c. 2.5 units. d. 1.15 units. a. 0.25 units. b. 0.9 units. c. 2.5 units. d. 1.15 units.Explanation / Answer
expected priec = .1*5 +.9*2 = 2.3
for max profit
MC=MR=Price
2q=2.3
q=1.15 units
d. 1.15 units.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.