A Family Business Is Considering Making an Investment in Its

question 24

Multiple Choice

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1) a large investment; (2) a medium investment;and (3) a small investment.The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand;and (3) decreasing demand.The business believes that the probability for increasing,stable and decreasing product demand are 0.4,0.5,and 0.1,respectively.The following payoff table describes the decision situation.

The expected value for the small investment decision is

• A)$540,000
• B)$400,000
• C)$330,000
• D)$165,000

---

Definitions:

Parents' Occupations

Refers to the jobs or professions practiced by mothers and fathers, often considered in research on socioeconomic status and child outcomes.

Ascription-Based Society

A society in which social status is largely determined by birth, family background, and other characteristics not achieved by individual effort or merit.

Upward Mobility

The ability or opportunity for individuals or groups to improve their economic status or social class.

Achievement-Based Society

A social system in which individuals are rewarded and ranked based on their accomplishments and merit.