A Plant Manager Wants to Know How Much She Should

question 56

Multiple Choice

A plant manager wants to know how much she should be willing to pay for perfect market research. Currently there are two states of nature facing her decision to expand or do nothing. Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large plant would lose $80,000 and the small plant would make $0. If the two states of nature are equally likely, how much should she pay for perfect information?

• A) $0
• B) $25,000
• C) $40,000
• D) $100,000
• E) $145,000

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Definitions:

2D:4D Ratio

The length of someone’s index finger divided by the length of their ring (third) finger; a low ratio is linked to a high testosterone level.

Assertive

Communicating one's needs, desires, and opinions in a direct, honest, and respectful way, while also considering the rights and opinions of others.

Leadership Positions

Leadership Positions refer to roles within organizations or groups that have the authority and responsibility to guide, direct, and influence others.

Variance

A statistical measure that represents the dispersion or spread of a set of data points.