Brit wants to sell throw blankets for the holiday season at a local flea market. Brit purchases the throws for $15, and sells them to his customers for $35. The rental space is fixed fee of $1500 for the season. Assume there is no leftover value for unsold units. The payoff, if he orders 200 and Demand is 150, is:a. 2800. b. 1050. c. 50. d. 800.

Correct option is b. 1050.

Explanation:

Note: There is an error in this question as the number of unit of order is 180 NOT 200 erroneously included in the question. The question is therefore fixed and the complete correct question is therefore provided before answering the question as follows:

Brit wants to sell throw blankets for the holiday season at a local flea market. Brit purchases the throws for $15, and sells them to his customers for $35. The rental space is fixed fee of $1500 for the season. Assume there is no leftover value for unsold units. The payoff, if he orders 180 and Demand is 150, is:a. 2800. b. 1050. c. 50. d. 800.

The explanation of the order is now provided as follows:

Total revenue = Demand * Selling price = 150 * $35 = $5,250

Cost of purchases = Order * Cost per unit = 180 * $15 = $2,700

Since it is assumed that there is no leftover value for unsold units, this implies that:

Payoff = Total revenue - Cost of purchases - Fixed fee for rental space = $5,250 - $2,700 - $1,500 = $1,050

This implies that the payoff is $1,050. Therefore, correct option is b. 1050.

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