A Company Is Considering Expansion of Its Current Facility to Meet

question 64

Essay

A company is considering expansion of its current facility to meet increasing demand.A major expansion would cost $500,000, while a minor expansion would cost $200,000.If demand is high in the future, the major expansion would result in an additional profit of $800,000, but if demand is low, then there would be a loss of $500,000.If demand is high, the minor expansion will result in an increase in profits of $200,000, but if demand is low, then there is a loss of $100,000.The company has the option of not expanding.For what probability of a high demand will the company be indifferent between the two expansion alternatives?

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Definitions:

Confirmation Bias

The tendency to search for, interpret, and remember information in a way that confirms one’s preconceptions or hypotheses.

Therapy

A treatment intended to relieve or heal disorders, typically involving a systematic process of interaction with a therapist.

Antisocial Personality Disorder

A mental condition in which a person consistently shows no regard for right and wrong and ignores the rights and feelings of others.

Psychotherapy

A form of therapy aimed at understanding and treating psychological and emotional problems through spoken conversation with a therapist.