A Movie Studio Faces Uncertainty About the Cost of Producing

question 49

Multiple Choice

A movie studio faces uncertainty about the cost of producing a film. Its cost can be $40 or $60 million with probabilities .6 and .4 respectively. The box office revenue from the film is also uncertain, either $60 million or $40 with probabilities .3 and .7 respectively. The film's expected profit is

• A) $10 million
• B) $12 million.
• C) $4 million.
• D) $16 million.
• E) None of these answers is correct.

---

Definitions:

Prestige

The respect and admiration that an individual or organization gains based on achievements or quality.

Politician

An individual who is involved in influencing public policy and decision making through election or appointment to a governmental office.

Policy

A course or principle of action adopted or proposed by an organization or individual, typically aimed at achieving specific goals.

Task Group

A collection of individuals brought together to achieve a specific goal, usually within a limited timeframe.