You Are Considering Making a "Hillary" Action Figure to Capitalize

question 25

Multiple Choice

You are considering making a "Hillary" action figure to capitalize on popular political fever. Production will cost $5 million. If political fever strikes, you will sell action figures worth $20 million (in present value [PV]) . If voters do not catch the political fever, you will only sell action figures worth $2 million (in PV) as only loyal Democrats will buy. Each possibility has a 50 percent chance. However, before production begins, you can conduct a marketing survey to determine which scenario will happen. The survey costs $1 million. Is it worth conducting the survey? Why?

• A)Do not conduct the survey as the NPV without a survey = +$6 million.
• B)Conduct the survey as the NPV with a survey = $6.5 million.
• C)Do not conduct the survey as the NPV with a survey = $5 million.
• D)Do not conduct the survey as the NPV with a survey = $4 million.

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Definitions:

Private Property

A legal designation for the ownership of property by non-governmental legal entities.

Court Order

A formal instruction issued by a judge or court requiring a person to do or not do something.

DeJonge v. Oregon

A landmark 1937 U.S. Supreme Court case that concluded that the First Amendment's freedom of assembly clause applies to state governments through the Due Process Clause of the Fourteenth Amendment.

Everson v. Board

A landmark Supreme Court case in 1947 that addressed the separation of church and state, ruling that state funding for transportation to religious schools did not violate the Establishment Clause of the First Amendment.