Refer to the Following:
a Firm Is Considering Two Projects

question 9

Multiple Choice

Refer to the following:
A firm is considering two projects, A and B, with the following probability distributions for profit.
$$\begin{array} { c c c } \begin{array} { c } \text { Profit } \\\text { (\$1,000s) }\end{array} & \begin{array} { c } \text { Praject } A \\\text { Probability } ( \% ) \end{array} & \begin{array} { c } \text { Project B} \\\text { Prabability (\%) }\end{array} \\\hline \$ 20 & 10 & 10 \\40 & 15 & 15 \\{ 5 0 } & 50 & { 2 5 } \\{ 8 0 } & 15 & 40 \\100 & 10 & 10\end{array}$$
-A decision maker using the analysis of variance rule would

• A) choose project A.
• B) choose project A only if risk averse.
• C) choose project B.
• D) choose project B only if risk loving.
• E) not be able to make a decision using that rule.

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Definitions:

Government

A system or group of people governing an organized community, often a state.

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Advantages or conveniences granted to a particular group or individual, often unique to their circumstances or status.

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Logrolling

The trading of votes by legislators to secure favorable outcomes on decisions concerning the provision of public goods and quasi-public goods.