Refer to the Following:
a Firm Is Considering Two Projects

question 43

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 who is risk neutral would

• A) choose project A.
• B) choose project B.
• C) not be able to make a decision.

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Definitions:

Cannon-Bard Theory

The Cannon-Bard theory is a psychological model proposing that emotional feelings and physiological reactions to stimuli occur simultaneously and independently.

Arousal Theory

Arousal theory suggests that there is an optimal level of arousal necessary for the best performance of any task; too little or too much arousal can decrease performance efficiency.

Body Response

Physical reactions or changes in the body as a response to stimuli or conditions.

Brain Circuit

A set of neurons and their connections that work together to carry out a specific function or process in the brain.