Questions: Question 15 (1 point) The food engineers at Moria Foods have developed a new variety of banana they have named the "mayfly banana" which hølds perfect ripeness for exactly one day before becoming a black-skinned sack of mush. Which of these actions will result in a lower order quantity from the many retail establishments clamoring to stock up on this new foodstuff? an increase in the price consumers are willing to pay for the mayfly banana an increase in the standard deviation of the number of mayfly bananas demanded by consumers a decrease in the salvage value of the mayfly bananas a decrease in the disposal cost of the mayfly bananas

Question 15 (1 point)
The food engineers at Moria Foods have developed a new variety of banana they have named the "mayfly banana" which hølds perfect ripeness for exactly one day before becoming a black-skinned sack of mush. Which of these actions will result in a lower order quantity from the many retail establishments clamoring to stock up on this new foodstuff?
an increase in the price consumers are willing to pay for the mayfly banana
an increase in the standard deviation of the number of mayfly bananas demanded by consumers
a decrease in the salvage value of the mayfly bananas
a decrease in the disposal cost of the mayfly bananas

Transcript text: Question 15 (1 point) The food engineers at Moria Foods have developed a new variety of banana they have named the "mayfly banana" which hølds perfect ripeness for exactly one day before becoming a black-skinned sack of mush. Which of these actions will result in a lower order quantity from the many retail establishments clamoring to stock up on this new foodstuff? an increase in the price consumers are willing to pay for the mayfly banana an increase in the standard deviation of the number of mayfly bananas demanded by consumers a decrease in the salvage value of the mayfly bananas a decrease in the disposal cost of the mayfly bananas

Solution

Solution Steps

To determine which action will result in a lower order quantity, we need to consider the economic and statistical factors affecting demand and supply. An increase in the price consumers are willing to pay typically increases demand, leading to a higher order quantity. An increase in the standard deviation of demand suggests more uncertainty, which could lead to a lower order quantity to minimize risk. A decrease in salvage value means less recovery from unsold bananas, potentially reducing order quantity. A decrease in disposal cost might encourage ordering more since the cost of unsold bananas is lower. Therefore, the actions that could lead to a lower order quantity are an increase in the standard deviation of demand and a decrease in salvage value.

Step 1: Analyze the Factors

To determine which actions will result in a lower order quantity of the mayfly banana, we analyze the effects of each proposed action on demand and supply dynamics.

Step 2: Evaluate Each Action

Increase in the price consumers are willing to pay: This typically leads to an increase in demand, which would increase the order quantity. Thus, this action does not contribute to a lower order quantity.
Increase in the standard deviation of demand: An increase in \( \sigma \) (standard deviation) indicates greater uncertainty in demand. To mitigate risk, retailers may choose to order less, leading to a lower order quantity.
Decrease in the salvage value: A lower salvage value \( S \) means that unsold bananas will yield less recovery. This discourages ordering large quantities, resulting in a lower order quantity.
Decrease in the disposal cost: A reduction in disposal costs \( C_d \) may encourage retailers to order more, as the cost of unsold bananas is lower. This action does not lead to a lower order quantity.

Step 3: Identify Actions Leading to Lower Order Quantity

From the analysis, the actions that lead to a lower order quantity are: