The Head of Operations for a Movie Studio Wants to Determine

question 3

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:

Privacy Concerns

Issues or anxieties related to the protection of personal information and the control over how such information is collected, used, and shared by entities.

Listening Selectively

The practice of focusing attention on specific information or sounds while ignoring others during communication.

Perceiving Selectively

The cognitive process where an individual pays attention only to information that aligns with their existing beliefs or interests, ignoring other data.

Effective Listening

The active process of receiving, understanding, and responding to spoken messages, demonstrating attention and interest in what the speaker is conveying.