A Company Is Considering Producing Some New Gameboy Electronic Games

question 115

Multiple Choice

A company is considering producing some new Gameboy electronic games.Based on past records, management believes that there is a 70 percent chance that each of these will be successful and a 30 percent chance of failure.Market research may be used to revise these probabilities.In the past, the successful products were predicted to be successful based on market research 90 percent of the time.However, for products that failed, the market research predicted these would be successes 20 percent of the time.If market research is performed for a new product, what is the probability that the results indicate an unsuccessful market for the product and the product is actually unsuccessful?

• A)0.63
• B)0.06
• C)0.07
• D)0.24

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Definitions:

Credits

An accounting entry that increases liabilities or equity or decreases assets on a company's balance sheet.

Debits

Debits are accounting entries that increase asset or expense accounts, or decrease liability, equity, or revenue accounts, typically noted on the left side of accounting ledgers.

Dividends Account

An account used to record the payment of dividends, which are distributions of a corporation's earnings to its shareholders.

Expense

Costs incurred in the process of earning revenue, typically including cost of goods sold, selling, general, and administrative expenses.