The Booster Club at Blair College sells hot dogs at home basketball games. The group has a
frequency distribution of the demand for hot dogs per game... Accounting MCQs | Accounting MCQs

The Booster Club at Blair College sells hot dogs at home basketball games. The group has a
frequency distribution of the demand for hot dogs per game and plans to apply the expected value decision
rule to determine the number of hot dogs to stock.
The Booster Club should select the demand level that

Is closest to the expected demand.Has the greatest probability of occurring.Has the greatest expected opportunity cost.Has the greatest expected monetary value.Show Result

Correct - Your answer is correct.

Wrong - Your answer is wrong.

Detailed Answer

Answer (D) is correct.
The Booster Club should select the demand level that maximizes profits,
that is, the level with the greatest expected monetary value. This level
may not include the event with the highest conditional profit because this
profit may be accompanied by a low probability of occurrence.
Alternatively, the event with the highest probability of occurrence may
not be selected because it does not offer a high conditional profit.