John Is Trying to Decide Whether to Expand His Business

question 100

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 he will earn $100,000 and a 50 percent chance he will earn $300,000.If he does expand,there is a 30 percent chance he will earn $100,000,a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000.It will cost him $150,000 to expand.The expected value of John's earnings if he chooses to expand is:

• A) $320,000
• B) $230,000
• C) $900,000
• D) $140,000

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Definitions:

Alveolar Ducts

Tiny ducts in the lungs that connect the bronchioles and alveolar sacs, facilitating gas exchange.

Terminal Bronchioles

The smallest air passages in the lungs that lead to the alveolar ducts, playing a crucial role in the transfer of oxygen and carbon dioxide.

Respiratory Bronchioles

The smallest airways in the respiratory system, through which air passes before reaching the alveolar sacs for gas exchange.

Thyrohyoid Ligament

A fibrous connective tissue that connects the thyroid cartilage to the hyoid bone, supporting the larynx.