You are a hotel manager considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table.ProjectBoom (50%)Recession (50%)A$40-$20B-$10$30C$50-$50D$60$60Which of the following statements is true?
A. A risk-neutral manager will prefer project D.
B. A risk-loving manager will prefer project D.
C. A risk-averse manager will prefer project D.
D. All of the statements are correct.
Answer: D
You might also like to view...
Between points "b" and "c" in the above figure, the opportunity cost of 250 more bushels of corn is
A) 200 yards of cloth. B) 250 yards of cloth. C) 600 yards of cloth. D) 800 yards of cloth.
When a transfer price is set lower
a. the profits of the division producing the intermediate product will rise b. the profits of the division producing the intermediate product will fall c. the costs of the division producing the intermediate product will rise d. the costs of the division producing the intermediate product will fall
In terms of framing, we respond better to:
A. negative framing. B. neither; research has shown that framing ultimately doesn't matter. C. consistent framing. D. positive framing.
Betty and Wilma are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week. By manually entering the price of each product purchased into the cash register, Betty can check out 20 customers and Wilma can check out 30 customers per hour. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Betty and Wilma can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ________ customers per hour and ________ customers per hour after the new machines were installed.
A. 50; 60 B. 50; 120 C. 1,000; 2,400 D. 25; 60