Ontel Engineers Proposed Developing a 10-Gigahertz Microprocessor in Early 2011

question 168

Multiple Choice

Ontel engineers proposed developing a 10-Gigahertz microprocessor in early 2011 at a cost of $20 million for a working prototype.By mid-2012,the $20 million had been spent with no prototype.The engineers request an additional $10 million to finish the project.For convenience,assume the marginal cost of producing the chip once it is developed is zero.
-In deciding whether to continue the 10-Gigahertz chip,Ontel executives should compare the __________ to the expected revenues.

• A) $20 million spent plus the extra $10 million
• B) $20 million spent
• C) extra $10 million
• D) $20 million spent minus the extra $10 million
• E) $20 million spent plus the extra $10 million plus $5 million for cost overruns

Understand the concept of confidence intervals, including their limits, and the role of confidence levels in statistical inference.

Grasp how the size of the sample and the population standard deviation influence the margin of error in confidence intervals.

Know how to construct confidence intervals for population means and proportions using sample data.

Understand the direct relationship between the margin of error, sample size, and confidence levels.

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Definitions:

Dual Values

In linear programming, dual values represent the amount by which the objective function of an optimization model would improve with a one-unit increase in the right-hand side value of a constraint.

Objective Function

A mathematical expression that defines the goal of an optimization problem, e.g., to maximize profits or minimize costs.

Solved

A situation or problem that has been resolved, answered, or dealt with successfully.

Shadow Price

An estimated price for something that is not normally bought or sold in the market, often used in constrained optimization to value the cost of using an additional unit of a scarce resource.