Exam 15: Making Decisions With Uncertainty

​You can either invest in project A or B.Project A could have a value of $100 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 $70 with a probability of 0.8.Which project should you invest in?

You raise your product price by $10 in market A but leave it unchanged in market B.Sales in A fall from 840 to 740 units per week while sales in B rise from 770 to 790 units.The Difference-in-difference estimate of the effect of the price change is:

​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. -​The firm learns that the probability of launch estimated for the voice activated software was too optimistic and instead is actually 65%.Is it still worth for the company to develop the simplified software?

​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 complicated technology costs $10million to develop,what is the expected gain from developing the thought activated software

​You are considering buying a store.In order to better access your return on the investment,your expectations of the return should be based on

​While working under uncertain conditions,it is better to

​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. -​What is the expected revenue from developing the complicated software?