The Head of Operations for a Movie Studio Wants to Determine

question 44

Multiple Choice

The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production.(Due to budgeting constraints,only one new picture can be undertaken at this time.) She feels that script #1 has a 70 percent chance of earning about $10,000,000 over the long run,but a 30 percent chance of losing $2,000,000.If this movie is successful,then a sequel could also be produced,with an 80 percent chance of earning $5,000,000,but a 20 percent chance of losing $1,000,000.On the other hand,she feels that script #2 has a 60 percent chance of earning $12,000,000,but a 40 percent chance of losing $3,000,000.If successful,its sequel would have a 50 percent chance of earning $8,000,000,but a 50 percent chance of losing $4,000,000.Of course,in either case,if the original movie were a "flop",then no sequel would be produced.What would be the total payoff if script #1 was a success,but its sequel was not?

• A)$15,000,000
• B)$10,000,000
• C)$9,000,000
• D)$5,000,000
• E)$-1,000,000

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Definitions:

Negligence Standard

A legal criterion used to evaluate whether a person's conduct lacks reasonable care, potentially leading to liability for damages caused by such carelessness.

Tort Law

The branch of law that deals with civil wrongs, personal or property damage, and other injuries for which courts can impose liability.

Tort Liability

Legal responsibility that arises from civil actions or wrongs not based on contracts, such as negligence or defamation.

Common Law

Law derived from judicial decisions and customs, as opposed to statutes or written legislation.