John Is Trying to Decide Whether to Expand His Business

question 60

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.John expects the value of his earnings to be ________ if he expands and ________ if he does not expand.

• A) $320,000; $200,000
• B) $170,000; $50,000
• C) $120,000; $200,000
• D) $30,000; $200,000

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Definitions:

Mumford's Skills Model

a framework for understanding leadership that emphasizes the importance of a leader's capabilities, including technical skills, conceptual skills, and interpersonal skills.

Katz's Hierarchical Three Skills Model

A framework suggesting three core leadership skills: technical, human, and conceptual, necessary at different levels of an organization.

Research Findings

The results or conclusions drawn from systematic investigation into a subject of study.

Social Judgment Competency

The skill to understand and manage interpersonal dynamics and perceptions effectively in social situations.