Solutions to Chapter 17.docx - Chapter 17 17-1 Global...

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Chapter 1717-1 Global ExpansionYou’re the manager of global opportunities for a U.S. Manufacturer, who is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, Philippines, and Singapore as described next:Success LevelMalaysiaPhilippinesSingaporeProbabilityUnitsProbabilityUnitsProbabilityUnitsBig0.31,200,0000.31,000,0000.7700,000Mediocre0.3600,0000.5320,0000.2400,000Failure0.400.200.10The product sells for $10 and has unit costs of $8. If you can enter only one market, and the cost of entering the market (regardless of which market you select) is $250,000, should you enter one of these markets? If so, which one? If you enter, what is your expected profit?
17-2 Game Show UncertaintyIn the final round of a TV game show, contestants have a chance to increase their current winnings of $1 million dollars to $2 million dollars. If they are wrong, their prize is decreased to $500,000. The contestant thinks his guess will be right 50% of the time. Should he play? What is the lowest probability of a correct guess that would make playing profitable?
17-3 Ad AgenciesTo test the effectiveness of a two Web advertising agencies, you increase your ad purchase with agency A by 50% without changing your purchase through agency B. The referrals to your website from agency A increased by only 34% but the referrals from agency B fell by 21%. Why might the difference-in-difference estimate of the referrals per dollar through agency A be biased?

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