Economics Homework Help
Your candy company is shutting down a production line, and its your responsibility to deal with the candy wrapping
Your candy company is shutting down a production line, and its your responsibility to deal with the candy wrapping
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machine. The company could keep it in inventory for a possible future product and estimates that the reservation value is $250,000. Your dealings on the secondhand market lead you to believe there is a 0.35 chance a random buyer will pay $300,000, a 0.25 chance the buyer will pay $350,000, a 0.15 chance the buyer will pay $400,000, and a 0.30 chance it will not sell.
Should you sell the machine or keep it?
If you must commit to a posted price, what price maximizes profit?
