Two Professors at a Nearby University Want to Co-Author a New

question 38

Multiple Choice

Two professors at a nearby university want to co-author a new textbook in either economics or statistics. They feel that if they write an economics book they have a 50% chance of placing it with a major publisher where it should ultimately sell about 40,000 copies. If they can't get a major publisher to take it, then they feel they have an 80% chance of placing it with a smaller publisher, with sales of 30,000 copies. On the other hand if they write a statistics book, they feel they have a 40% chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they can't get a major publisher to take it, they feel they have a 50% chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies.
What is the expected payoff for the optimum decision alternative?

• A) 50,000 copies
• B) 40,000 copies
• C) 32,000 copies
• D) 30,500 copies
• E) 10,500 copies

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Definitions:

Untimely

Untimely refers to something occurring or being done at an inappropriate, inopportune, or irregular time, often resulting in adverse effects or inconveniences.

Negotiate

The process of discussing terms and conditions with the aim of reaching an agreement or compromise.

Perfect Tender Rule

A principle in commercial law that a seller's performance must exactly meet the contract specifications or the buyer can reject the goods.

Commercial Unit

A term used in the Uniform Commercial Code referring to a standard of measure, item, or a set of items that are treated as a single unit for the purposes of a transaction.