The Head of Operations for a Movie Studio Wants to Determine

question 70

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 is the expected value of selecting script 1?

• A)$15,000,000
• B)$9,060,000
• C)$8,400,000
• D)$7,200,000
• E)$6,000,000

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Definitions:

Cognitive Development

The progression and growth of mental processes such as thinking, reasoning, and understanding through different stages of life.

Cultural Influence

The impact that culture has on the way individuals perceive, behave, and interact within society, shaping their values, norms, and practices.

Executive Functions

Executive functions are a set of cognitive processes including attentional control, inhibitory control, working memory, and cognitive flexibility, which are necessary for the cognitive control of behavior.

Cognitive Processes

The mental actions or mechanisms by which knowledge is acquired, processed, and utilized, including perception, memory, and reasoning.