If you enter the german market you have a 2 chance of

This preview shows page 1 - 3 out of 3 pages.

If you enter the German market, you have a .2 chance of huge success (selling 150,000units at a per-unit of $10), a .5 chance of moderate success (selling 70,000 units at a per-unit profit of $6), and a .3 chance of failure (selling nothing).
85000Failure - 0.30 Selling Nothing = 0 250000 -250000 -75000Expected Profit=summation of Probability of state * Net Profit in that state = 260000a) If you can enter only market, and the cost of entering the market (regardless of whichmarket you select) is $250,000, should you enter one of the European markets?
b) If so, which one?
c) If you enter, what is your expected profit?
Problem 17.2 Game Show UncertaintyContestants have a chance to increase their current winning of 1 million dollars to 10 million dollars. It they are wrong, their prize is decreased to $100,000. To win, they have to guess the exact percentage that answered a question a certain way, and the range has already been narrowed down to an 11 point range. So for example, the contestant knows that they correct answer is between 20% and 30% and he or she must guess the correct

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture