The Owner of Tastee Cookies Needs to Decide Whether to Lease

question 78

Multiple Choice

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:
If she feels there is a 30 percent chance that demand will be high, what are the expected monthly profits for the outlet she will decide to lease?

• A) $1,600
• B) $1,100
• C) $1,000
• D) $900
• E) $500

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Definitions:

Command Economy

An economic system where the government, rather than the free market, determines what goods should be produced, how much should be produced, and the price at which goods will be offered for sale.

Political Hierarchy

A system of organization within a political entity or government where individuals or groups are ranked one above the other based on authority or power.

Soviet Union

A former federation of Communist republics consisting of Russia and several other states that existed from 1922 to 1991, officially known as the Union of Soviet Socialist Republics (USSR).

Business Risk

The possibility of losing money on an investment or business venture due to various factors like market fluctuations, competition, or operational failures.