Scenario 5.3: Wanting to Invest in the Computer Games Industry, You Select

question 130

Multiple Choice

Scenario 5.3:
Wanting to invest in the computer games industry, you select Whizbo, Yowzo and Zowiebo as the three best firms. Over the past 10 years, the three firms have had good years and bad years. The following table shows their performance:

-Refer to Scenario 5.3. Based on the 10 years' past performance, what is the probability of a good year for Zowiebo?

• A) 30/31
• B) 1/31
• C) 0.9
• D) 0.1

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Definitions:

Profit Per Unit

The difference between the selling price and the cost of producing or purchasing one unit of a good or service.

Optimal Output

The level of production that maximizes a firm's profit or minimizes its costs, determined by where marginal cost equals marginal revenue.

Price to Clear

The market price at which the quantity supplied equals the quantity demanded, ensuring all goods in the market are sold.

Profit-Maximizing Output

The optimal production stage for a business, where the highest profit is realized at the point where marginal cost equals marginal revenue.