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blagie [28]
3 years ago
14

Charlie Plopp is selling a horse. If he does not sell the horse, then he gets no revenue. Three types of people are interested i

n buying the horse: professional cowboys who value the horse at $H, recreational riders who value the horse at $M, and glue factory representatives who value the horse at $L, where H>M>L. There are two buyers visiting Charlie's barn, and while Charlie can't tell what type of buyers they are, he knows that each one is independently and equally likely to be one of the three types. He is considering two methods of selling the horse: Method 1: He posts the horse at a price of $M. Method 2: He runs a sealed-bid auction and sells to the highest bidder at the second highest bid. Assume bidders bid rationally, and if a buyer is indifferent between buying and not buying, he buys. Charlie gets higher expected revenue from Method 2 if and only if which of the following conditions holds?
A) H+ 5L > SM
B) H+4L > 7M
C) 2H + 5M > 4M
D) H+ 5L <8M
E) H+ 5L <5M
Business
1 answer:
qaws [65]3 years ago
8 0
I think it’s E if not then it’s C
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Answer: (D) Involvement culture

Explanation:

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Answer:

I think it is a guarantee.

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3 years ago
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Trava [24]

Answer:

Difference= $60,000 in favor of buying

Explanation:

Giving the following information:

Number of units= 12,000

Make in-house:

Direct material, $15

direct labor, $27

variable overhead, $15

applied fixed overhead, $32

Buy:

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<u>First, we will calculate the avoidable fixed overhead per unit:</u>

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<u>Now, the total differential cost of making in-house:</u>

<u></u>

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4 0
2 years ago
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