Question 1

​Four possibilities have probabilities 0.4,0.2,0.2 and 0.2 and values $40,$30,$20,and $10 respectively.The expected value is:

Accepted Answer

A) ​$22 
B) $24 
C) $26 
D) ​$28 
A) ​$22 
B) $24 
C) $26 
D) ​$28 D

Question 2

​Three possibilities are equally likely and have payoffs of $3,$6,and $9.The expected value is:

Accepted Answer

A) ​$4 
B) $5 
C) $6 
D) ​$7 
A) ​$4 
B) $5 
C) $6 
D) ​$7 C

Question 3

You want to run a difference-in-difference experiment with a price increase for the bacon cheeseburger item on your menu.If you are worried about the "representativeness" with your control group,a poor comparison menu item would be

Accepted Answer

A) ​soft drink sales 
B) the bacon burger without cheese 
C) the bacon-lettuce-and-tomato sandwich 
D) ​the regular cheeseburger 
A) ​soft drink sales 
B) the bacon burger without cheese 
C) the bacon-lettuce-and-tomato sandwich 
D) ​the regular cheeseburger A

Question 4

You increase the advertising intensity for your product in market A but not in market B.Sales in A rise from 1140 to 1180 units per week while sales in B fall from 1270 to 1230.The Difference-in-difference estimate of the effect of the increased advertising is:

Accepted Answer

A) ​0 units 
B) 80 units 
C) 100 units 
D) ​120 units 
A) ​0 units 
B) 80 units 
C) 100 units 
D) ​120 units

Question 5

​A random variable is

Accepted Answer

A) ​A variable that takes of values that are uncertain 
B) A variable that takes on known values 
C) A variable that is always zero 
D) ​A variable that takes on null values only 
A) ​A variable that takes of values that are uncertain 
B) A variable that takes on known values 
C) A variable that is always zero 
D) ​A variable that takes on null values only

Question 6

You decrease your product price by $10 in market A but leave it unchanged in market B.Sales in A rise from 840 units per week to 940 while sales in B also rise from 770 to 790.The difference-in-difference estimate of the effect of the price change is:

Accepted Answer

A) ​80 units 
B) 100 units 
C) 120 units 
D) ​140 units 
A) ​80 units 
B) 100 units 
C) 120 units 
D) ​140 units

Question 7

​Which types of poor decisions are more visible to a decision maker's supervisor?

Accepted Answer

A) ​Agreeing to undertake an unprofitable project 
B) Deciding not to undertake a profitable project 
C) Deciding not to undertake an unprofitable project 
D) ​Deciding to investigate a proposed project until one is certain 
A) ​Agreeing to undertake an unprofitable project 
B) Deciding not to undertake a profitable project 
C) Deciding not to undertake an unprofitable project 
D) ​Deciding to investigate a proposed project until one is certain

Question 8

​At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming that the wheel is fair,what is the expected value of the play?

Accepted Answer

A) ​$20 
B) $40 
C) $60 
D) ​$80 
A) ​$20 
B) $40 
C) $60 
D) ​$80

Question 9

​You can either invest in project A or B.Project A could have a value of $150 with a probability of 0.1 or a value of $75 with probability 0.9.Project B could have a value of $110 with probability 0.2 or a value of $65 with a probability of 0.8.Which project should you invest in?

Accepted Answer

A) ​Project A 
B) Project B 
C) Neither of the projects 
D) ​You cannot tell from the information presented 
A) ​Project A 
B) Project B 
C) Neither of the projects 
D) ​You cannot tell from the information presented

Question 10

​At a fair carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $40 to play,would an individual gain or lose from playing the game

Accepted Answer

A) ​Gain 
B) Lose 
C) Breakeven-neither gain nor lose 
D) ​None of the above 
A) ​Gain 
B) Lose 
C) Breakeven-neither gain nor lose 
D) ​None of the above

Question 11

​Use the following information for question
Transcendent Technologies is deciding between developing a complicated thought-activated software,or a simple voice-activated software.Since the thought-activated software is complicated,it only has a 30% chance of actually going through to a successful launch,but would generate revenues of $50million if launched.The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million.The complicated technology costs 10million,whereas the simple technology costs 2million.
-​If the firm learns that the complicated technology can be made more stable with a few tweaks increasing the price to 15.5 million and increasing the probability of a launch to 50%.Given the new costs and probabilities of launch for the complicated software,which technology would the firm rather invest in now?

Accepted Answer

A) ​The simple voice-activated software 
B) The complicated thought-activated software 
C) Neither of the software 
D) ​Need more information 
A) ​The simple voice-activated software 
B) The complicated thought-activated software 
C) Neither of the software 
D) ​Need more information

Question 12

​At a carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $35 to play,we would expect to see

Accepted Answer

A) ​A long line of players waiting to play 
B) No players for the game 
C) The carnival losing money per play 
D) ​Both A&C 
A) ​A long line of players waiting to play 
B) No players for the game 
C) The carnival losing money per play 
D) ​Both A&C

Question 13

​You can invest $100,000 into either project A or B.You estimate that A would succeed with a probability of 0.6 in which case it doubles in value.If it fails,its scrap value is $50,000.Project B would succeed with probability 0.7,in which case it would have a value of $150,000.If it fails,project B's scrap value is $30,000.Which project should you invest in

Accepted Answer

A) ​Project A 
B) Project B 
C) Neither of the projects 
D) ​You cannot tell from the information presented 
A) ​Project A 
B) Project B 
C) Neither of the projects 
D) ​You cannot tell from the information presented

Question 14

​The VP in charge of product launches hypothesizes that a particular product would not be profitable,then killing a potentially profitable product is a

Accepted Answer

A) ​Type I error 
B) Type II error 
C) Type III error 
D) ​Type IV error 
A) ​Type I error 
B) Type II error 
C) Type III error 
D) ​Type IV error

Question 15

​Three possibilities have probabilities 0.4,0.4 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

Accepted Answer

A) ​$15 
B) $16 
C) $17 
D) ​$18 
A) ​$15 
B) $16 
C) $17 
D) ​$18

Question 16

You experiment by offering free warranties for your product in market A but not in market B.Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430.The Difference-in-difference estimate of the effect of the free warranty is:

Accepted Answer

A) ​80 units 
B) 100 units 
C) 120 units 
D) ​140 units 
A) ​80 units 
B) 100 units 
C) 120 units 
D) ​140 units

Question 17

Transcendent Alternatives
Transcendent Technologies is deciding between developing complicated,thought-activated software,or simple,voice-activated software.The voice-activated software would cost $50 million to develop and has a 60% chance of being successfully launched and generating revenue of $100 million.The thought-activated software would be a bonanza if successful,generating $1 billion in revenue.But it is so complicated,it is projected to cost would be $400 million.How likely would success have to be for Transcendent Technologies to opt for the thought-activated software?

Accepted Answer

Expected profits from the voice-activate

Question 18

​A movie producer has to decide to fund a new movie project.For this project,a success would earn $20 million and a failure would cost $60 million in lost profits. At what probability of expected success should he fund the movie?

Accepted Answer

A) ​0.20 
B) 0.25 
C) 0.50 
D) ​0.75 
A) ​0.20 
B) 0.25 
C) 0.50 
D) ​0.75

Question 19

​At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming a rational player,how much should the game owner charge the player,to maximize his own profit?

Accepted Answer

A) ​$30 
B) $40 
C) $50 
D) ​$80 
A) ​$30 
B) $40 
C) $50 
D) ​$80

Question 20

​Three possibilities have probabilities 0.5,0.3 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

Accepted Answer

A) ​$15 
B) $16 
C) $17 
D) ​$18 
A) ​$15 
B) $16 
C) $17 
D) ​$18

Four possibilities have probabilities 0.4,0.2,0.2 and 0.2 and values $40,$30,$20,and $10 respectively.The expected value is:

Three possibilities are equally likely and have payoffs of $3,$6,and $9.The expected value is:

You want to run a difference-in-difference experiment with a price increase for the bacon cheeseburger item on your menu.If you are worried about the "representativeness" with your control group,a poor comparison menu item would be

You increase the advertising intensity for your product in market A but not in market B.Sales in A rise from 1140 to 1180 units per week while sales in B fall from 1270 to 1230.The Difference-in-difference estimate of the effect of the increased advertising is:

A random variable is

You decrease your product price by $10 in market A but leave it unchanged in market B.Sales in A rise from 840 units per week to 940 while sales in B also rise from 770 to 790.The difference-in-difference estimate of the effect of the price change is:

Which types of poor decisions are more visible to a decision maker's supervisor?

At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming that the wheel is fair,what is the expected value of the play?

You can either invest in project A or B.Project A could have a value of $150 with a probability of 0.1 or a value of $75 with probability 0.9.Project B could have a value of $110 with probability 0.2 or a value of $65 with a probability of 0.8.Which project should you invest in?

At a fair carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $40 to play,would an individual gain or lose from playing the game

At a carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $35 to play,we would expect to see

The VP in charge of product launches hypothesizes that a particular product would not be profitable,then killing a potentially profitable product is a

Three possibilities have probabilities 0.4,0.4 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

You experiment by offering free warranties for your product in market A but not in market B.Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430.The Difference-in-difference estimate of the effect of the free warranty is:

A movie producer has to decide to fund a new movie project.For this project,a success would earn $20 million and a failure would cost $60 million in lost profits. At what probability of expected success should he fund the movie?

At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming a rational player,how much should the game owner charge the player,to maximize his own profit?

Three possibilities have probabilities 0.5,0.3 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 15: Making Decisions With Uncertainty

​Four possibilities have probabilities 0.4,0.2,0.2 and 0.2 and values $40,$30,$20,and $10 respectively.The expected value is:

​Three possibilities are equally likely and have payoffs of $3,$6,and $9.The expected value is:

You want to run a difference-in-difference experiment with a price increase for the bacon cheeseburger item on your menu.If you are worried about the "representativeness" with your control group,a poor comparison menu item would be

You increase the advertising intensity for your product in market A but not in market B.Sales in A rise from 1140 to 1180 units per week while sales in B fall from 1270 to 1230.The Difference-in-difference estimate of the effect of the increased advertising is:

​A random variable is

You decrease your product price by $10 in market A but leave it unchanged in market B.Sales in A rise from 840 units per week to 940 while sales in B also rise from 770 to 790.The difference-in-difference estimate of the effect of the price change is:

​Which types of poor decisions are more visible to a decision maker's supervisor?

​At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming that the wheel is fair,what is the expected value of the play?

​You can either invest in project A or B.Project A could have a value of $150 with a probability of 0.1 or a value of $75 with probability 0.9.Project B could have a value of $110 with probability 0.2 or a value of $65 with a probability of 0.8.Which project should you invest in?

​At a fair carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $40 to play,would an individual gain or lose from playing the game

​At a carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $35 to play,we would expect to see

​The VP in charge of product launches hypothesizes that a particular product would not be profitable,then killing a potentially profitable product is a

​Three possibilities have probabilities 0.4,0.4 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

You experiment by offering free warranties for your product in market A but not in market B.Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430.The Difference-in-difference estimate of the effect of the free warranty is:

​A movie producer has to decide to fund a new movie project.For this project,a success would earn $20 million and a failure would cost $60 million in lost profits. At what probability of expected success should he fund the movie?

​At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming a rational player,how much should the game owner charge the player,to maximize his own profit?

​Three possibilities have probabilities 0.5,0.3 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Four possibilities have probabilities 0.4,0.2,0.2 and 0.2 and values $40,$30,$20,and $10 respectively.The expected value is:

Three possibilities are equally likely and have payoffs of $3,$6,and $9.The expected value is:

A random variable is

Which types of poor decisions are more visible to a decision maker's supervisor?

At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming that the wheel is fair,what is the expected value of the play?

You can either invest in project A or B.Project A could have a value of $150 with a probability of 0.1 or a value of $75 with probability 0.9.Project B could have a value of $110 with probability 0.2 or a value of $65 with a probability of 0.8.Which project should you invest in?

At a fair carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $40 to play,would an individual gain or lose from playing the game

At a carnival roulette wheel,a player can either win $10,$30,or $80.If it costs $35 to play,we would expect to see

The VP in charge of product launches hypothesizes that a particular product would not be profitable,then killing a potentially profitable product is a

Three possibilities have probabilities 0.4,0.4 and 0.2 and values $10,$20,and $30 respectively.The expected value is:

A movie producer has to decide to fund a new movie project.For this project,a success would earn $20 million and a failure would cost $60 million in lost profits. At what probability of expected success should he fund the movie?

At a fair carnival roulette wheel,a player can either win $10,$30,or $80.Assuming a rational player,how much should the game owner charge the player,to maximize his own profit?

Three possibilities have probabilities 0.5,0.3 and 0.2 and values $10,$20,and $30 respectively.The expected value is: