Refer to the Following:
a Firm Is Considering the Decision $\text { The economy }$

question 48

Multiple Choice

Refer to the following:
A firm is considering the decision of investing in new plants. It can choose no new plants, one new plant, or two new plants. The following table gives the profits for each choice under three states of the economy. The manager assigns the following probabilities to each state of the economy: the economy expands, 20%, the economy contracts, 40%, or the economy is unchanged 40%.
$\text { The economy }$
$\begin{array}{lccc} & \text { expands }(0.20) & \text { contracts }(0.40) & \text { unchanged }(0.40) \\\hline \text { no new plants } & \$ 10 \text { million } & -\$ 2 \text { million } & \$ 3 \text { million } \\1 \text { new plant } & \$ 20 \text { million } & -\$ 3 \text { million } & \$ 7 \text { million } \\2 \text { new plants } & \$ 30 \text { million } & -\$ 6 \text { million } & \$ 5 \text { million }\end{array}$
-Using the coefficient of variation rule, the firm should build

• A) no new plants.
• B) one new plant.
• C) two new plants.
• D) cannot tell with this information

Comprehend the familiarity hypothesis and preferences in perception of selves and others.

Grasp the concept and implications of diffusion of responsibility in group settings.

Identify situational and dispositional factors influencing behavior, with examples from Zimbardo and Milgram's research.

Recognize the factors influencing bystander intervention in emergencies.

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Definitions:

Psychoanalysis

A therapeutic approach and theory of psychology developed by Sigmund Freud that emphasizes the exploration of the unconscious mind.

Theoretical Background

The foundation of existing theories and concepts that support a new study, idea, or research approach.

Key Concepts

Fundamental ideas or principles that form the foundation for understanding a subject or discussion.

Cognitive Distortions

Faulty or biased ways of thinking that are often negative and lead to inaccurate perception of reality.