John Is Trying to Decide Whether to Expand His Business

question 13

Multiple Choice

John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance his revenue will be $100,000 and a 50 percent chance his revenue will be $300,000. If he does expand, it will cost him $150,000, and there is a 30 percent chance his revenue will be $100,000; a 30 percent chance his revenue will be $300,000; and a 40 percent chance his revenue will be $500,000.What should John do?

• A)Expand, because he expects to earn $320,000 in revenue by expanding and it will only cost him $150,000 to do so.
• B)Not expand, because there is a chance he can earn the same amount not expanding without making the $150,000 investment.
• C)Not expand, because he expects to earn only $120,000 more revenue by expanding than not, and it will cost him $150,000 to expand.
• D)Expand, because he has a 70 percent chance of earning more revenue by expanding than what it will cost to do so.

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Definitions:

Lymphocytes

A subclass of white blood cells vital to the immune system, involved in producing antibodies and destroying infected or cancerous cells.

Adaptive Immunity

Adaptive Immunity refers to the immune system’s ability to recognize and specifically target foreign invaders, such as viruses and bacteria, through antibodies and specific immune cells.

Antigens

Substances, often foreign, that induce an immune response in the body, especially the production of antibodies.

Interferon

A type of protein produced by cells in response to viral infections, functioning as part of the immune response to inhibit virus spread.