A Price Cut Would Increase the Firm's Profits by $2

Multiple Choice

A price cut would increase the firm's profits by $2 million if demand is weak but would decrease profit by $3 million if demand proves to be strong.The firm's best assessment is a 0.3 probability of strong demand.The firm conducts market research that clearly indicates that demand is weak.The expected value of this information from market research is _____.

A) $0
B) $0.5 million
C) $1.5 million
D) $1.4 million
E) $2 million