Use the Information for the Question(s) Below

question 60

Multiple Choice

Use the information for the question(s) below.
Big Cure and Little Cure are both pharmaceutical companies. Big Cure presently has a potential "blockbuster" drug before the Food and Drug Administration (FDA) waiting for approval. If approved, Big Cure's blockbuster drug will produce $1 billion in net income for Big Cure. Little Cure has 10 separate less important drugs before the FDA waiting for approval. If approved, each of Little Cure's drugs would produce $100 million in net income for Little Cure. The probability of the FDA approving a drug is 50%.
-What is the expected payoff for Big Cure's blockbuster drug?

• A) $100 million
• B) $0
• C) $1 billion
• D) $500 million

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, typically measured by GDP.

Natural Resources

Materials or substances that occur in nature and can be used for economic gain, such as minerals, forests, water, and fertile land.

High Tariffs

Taxes imposed on imported goods to protect domestic industries from foreign competition by making imported goods more expensive.

Second Industrial Revolution

A period of rapid industrial growth and technological advancement during the late 19th and early 20th centuries, often associated with new innovations in steel production, electricity, and transportation.