Which of the following products would be most appropriately analyzed using a single-period model in economics?

• A. Automobiles
• B. Residential houses
• C. Freshly baked bread
• D. Industrial machinery

Answer: (C)

Verified step by step guidance

1. Step 1: Understand what a single-period model is. In economics, a single-period model is used to analyze products or decisions that involve only one selling period or one time frame, after which the product either loses value or cannot be sold again.
2. Step 2: Identify the characteristics of products suitable for a single-period model. These products are typically perishable, have a short shelf life, or become obsolete quickly, meaning unsold inventory at the end of the period has little to no value.
3. Step 3: Evaluate each product option based on these characteristics: Automobiles and industrial machinery are durable goods with long selling periods; residential houses are also durable and involve long-term transactions; freshly baked bread is perishable and must be sold quickly, fitting the single-period model.
4. Step 4: Conclude that freshly baked bread is the most appropriate product for analysis using a single-period model because it is perishable and must be sold within a short time frame, unlike the other options.
5. Step 5: Remember that the single-period model helps businesses decide how much inventory to order or produce when dealing with perishable or time-sensitive goods to maximize expected profit and minimize waste.