Sanjeev Enters into a Contract Offering Uncertain Consideration

question 184

Multiple Choice

Sanjeev enters into a contract offering uncertain consideration. The contract pays him $1,000/month for six months of continuous consulting services. In addition, there is a 60% chance the contract will pay an additional $2,000, and a 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev estimates uncertain consideration using the probability-weighted amount. What is the amount of revenue Sanjeev would recognize for the first month of the contract?

• A)$0.
• B)$1,000.
• C)$1,333.
• D)$1,400.

---

Definitions:

Increase Magnitude

The act of making something greater in size, amount, importance, or intensity.

Reinforcement

In behavioral psychology, any event that strengthens or increases the likelihood of a behavior.

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response; in biology, the end of an organism or a group of organisms.

Undesirable Behavior

Actions or reactions that are not wanted or are considered negative by society or individuals.