Tversky and Co

question 29

Essay

Tversky and Co. have devised a new psychological test for investors' risk tolerance. They expect to sell 10,000 tests in the first year at $150 each. Cash costs associated with producing, administering and scoring the test are $50 per unit. In the second year, volume is expected to be the same, but both the price and the costs will increase 2.5%. Forecast gross profit in the second year.

---

Definitions:

Financial Risk

The possibility of losing money on investments or business operations due to various factors.

Hulu App

A mobile application that provides streaming of television shows, movies, and other video content over the internet, offered by the Hulu service.

Better Value

Describes products or services that offer more benefits and quality compared to their cost, thus representing a higher value to the customer.

Determinant Attributes

Product or service features that are important to the buyer and on which competing brands or stores are perceived to differ.