John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. The difference in expected earnings if John chooses to expand versus not expand is:
A. $320,000.
B. $200,000.
C. $150,000.
D. $120,000.
D. $120,000.
You might also like to view...
The nominal interest rate is 12 percent and the inflation rate is 4 percent. The opportunity cost of holding a dollar for a year is
A) 16 cents. B) 88 cents. C) 48 cents. D) 12 cents. E) 8 cents.
What are the reasons for the development and growth of the Eurodollar market?
What will be an ideal response?
Equilibrium price must decrease when demand
a. increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.
The optimal allocation of resources is found:
A. where MB = MC. B. at every point along a production possibilities curve. C. where the marginal benefit is at its greatest. D. where the marginal cost is at its lowest.