Scenario 5.9: Torrid Texts, a Risk-Neutral New Firm That Specializes in Making

question 30

Multiple Choice

Scenario 5.9:
Torrid Texts, a risk-neutral new firm that specializes in making college textbooks more interesting by inserting contemporary material wherever possible, is planning for next year's production and must decide how many paper producers to contract with. It knows fairly well what the general demand for textbooks is, but is uncertain how faculty will react to this new material. If faculty react very negatively, the firm expects course orders to be down. The executives at Torrid believe that the likelihood of a positive faculty response is 75%. The table below contains profit information under the different possible outcomes.
Producers Faculty Reaction Expected
Contracted Negative Positive Profit
1 $3 million $30 million $23.25 million
2 $1 million $60 million $45.25 million
-Refer to Scenario 5.9. The value to Torrid Texts of complete information is

• A) $0.25 million.
• B) $0.5 million.
• C) $1 million.
• D) $14.75 million.
• E) $30 million.

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Definitions:

Biphobic Marginalization

The exclusion or discrimination against bisexual individuals, stemming from stereotypes, prejudices, and fear of bisexuality.

Disciplinary Identity

The sense of belonging and identification with a specific academic discipline or field of study, shaped by its particular methodologies, norms, and community.

Homophobia

Prejudice or discrimination against individuals based on their real or perceived homosexuality.

Heterosexism

A system of attitudes, bias, and discrimination in favor of opposite-sex sexuality and relationships.