The Head of Operations for a Movie Studio Wants to Determine

question 19

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.She feels that script #1 has a 70% chance of earning $100 million over the long run,but a 30% chance of losing $20 million.If this movie is successful,then a sequel could also be produced,with an 80% chance of earning $50 million,but a 20% chance of losing $10 million.On the other hand,she feels that script #2 has a 60 % chance of earning $120 million,but a 40% chance of losing $30 million.If successful,its sequel would have a 50% chance of earning $80 million and a 50% chance of losing $40 million.As with the first script,if the original movie is a "flop",then no sequel would be produced.
-What is the expected payoff from selecting script #1?

• A)$150 million
• B)$90 6 million
• C)$84 million
• D)$72 million
• E)$60 million

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Definitions:

Place Theory

A theory in psychology that explains how humans perceive sound frequencies based on the specific location of hair cells stimulated in the cochlea.

Place Theory

A theory in hearing that suggests different areas of the basilar membrane respond to various frequencies, enabling us to distinguish sounds.

Sound Frequencies

Refers to the number of vibrations or cycles per second of a sound wave, measured in Hertz (Hz), impacting the pitch of the sound.

Gate-Control Theory

A theory that explains how the perception of pain is not just a direct result of activating pain fibers but is also modulated by interplay between different neurons in the spinal cord.