A Manufacturer of Breakfast Cereals Has the Opportunity to Purchase

Multiple Choice

A manufacturer of breakfast cereals has the opportunity to purchase barley at $3.00 a kilo for 10,000 kilos, if it also buys 5000 kilos of wheat at $16.00 per kilo. However, the manufacturer does not use any barley in its products, and currently needs 20,000 kilos of wheat. If the current market price of barley is $3.80 per kilo, and wheat is $15.80 per kilo, should this opportunity be taken, and why?

A) Because the company has no need of barley, the opportunity should not be taken.
B) Because the value of the opportunity is positive, the opportunity should be taken.
C) Because the value of the opportunity is negative, the opportunity should not be taken.
D) Because the opportunity does not meet the company's need for wheat, the opportunity should not be taken.