Which of these statements about the one-period model is best?
A) Purchasing a quantity with the highest expected payoff will result in a positive payoff regardless of demand during the period.
B) The loss per unit cannot exceed the profit per unit.
C) If demand exceeds the purchased quantity then the payoff exceeds the expected payoff.
D) The expected payoff is always less than the actual payoff.

Question

Quizplus · Accepted Answer

If demand exceeds the purchased quantity, the actual payoff can exceed the expected payoff because the model assumes selling all units purchased, leading to higher realized profits.

Which of These Statements About the One-Period Model Is Best