Transcendent Technologies is deciding between developing a complicated thought- activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a 30% chance of actually going through to a successful launch, but would generate revenues of $50million if launched. The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million. The complicated technology costs 10million, whereas the simple technology costs 2 million. What is the expected profit from developing the complicated software? $10 million $15 million $20 million $5 million
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- Mega Studios is thinking of producing a megafilm which could be a megahit or a megaflop. Profit is uncertain for two reasons: (1) the cost of producing the film may be low or high, and (2) the market reception for the film may be strong or weak. There is a 0.6 chance of low costs (and a 0.4 chance of high costs). The probability of strong demand is 0.5 (the probability of weak demand is 0.5). The studio’s profits (in millions of dollars) for the four possible outcomes are shown in the table: demand strong weak cost low 80 10 high 0 -70 a) Should the studio produce the film? Justify your answer using expected profits. b) The studio is concerned that the film’s director might let production costs get out of control. Thus, the studio insists on a clause in the production contract giving it the right to terminate the project after the first $30 million is spent. By this time, the studio will know for certain whether total production costs are going to be low (i.e. under control)…Nesto hypermarket sells three brands (A, B, and C) of laptop computers. The monthly sales of the three brands are: Brand A = 15 units; Brand B = 9 units and Brand C = 12 units. The unit price of brand A is R.O. 300; brand B is R.O. 280 and brand C is R.O. 200. The cost to the Stores is 280 R.O. for brand A; 260 R.O. for brand B, and 180 R.O for brand C. Let Q = ; P =; and C = Using the above matrices, calculate the following: Calculate total revenue Calculate total cost Calculate the monthly profitA big data firm Statqo Analytics report shows that Gojek had experienced a 14 percent downturn during the pandemic. Therefore Gojek has a plan to provide special promotions for its customers. However, Gojek still needs to consider its competitor, Grab, before deciding. Based on Gojek’s board of directors calculation, if neither Gojek nor Grab offers discount pricing, a profit of US $2.5 million will be earned by Gojek, and US $2 million will be earned by Grab. However, if Gojek is the only one to offer a discount, it will earn US $5million, while Grab profits will fall to US$ 3 million. If Grab offers a discount and Gojek continues to charge the regular price, Grab profits will total US $3.5 million while Gojek monthly profits fall to US$1.5 million. Finally, if For both Gojek and Grab are to offer discount prices, thereby they will get a modest profit of US $4 million and US $2.5 million, respectively a. Develop a normal-form game of the situation by filling up the table bellow…
- Phillip Witt, president of Witt Input Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. Suppose that Phillip is willing to use one local supplier and up to two more located in other territories within the country. This would reduce the probability of a "super-event" that might shut down all suppliers at the same time at least 2 weeks to 0.6%, but due to increased distance the annual costs for managing each of the distant suppliers would be $24,500 (still $16,000 for the local supplier). A total shutdown would cost the company approximately $380,000. He estimates the "unique-event" risk for any of the suppliers to be 4%. Assuming that the local supplier would be the first one chosen, how many suppliers should Witt Input Devices use? Find the EMV for alternatives using 1, 2, or 3 suppliers. EMV(1) = $ 36210 (Enter your response rounded to the nearest whole number.)A firm plans to expand its product line and faces a dilemma whether to build a small or largefacility to produce new products. If it builds a small facility and demand is low, the NPV afterdeducting for building costs will be four hundred thousand pesos. If demand is high, the firm caneither maintain the small facility or expand it. Expansion would have an NPV of four hundredfifty pesos while maintaining the small facility would have an NPV of fifty thousand pesos. If alarge facility is built and demand is high, the estimated NPV would be eight hundred thousandpesos. If demand turns out to be low, the NPV would be a loss of ten thousand. The probabilitythat the demand is high is estimated to be sixty percent.a. Analyze using a decision tree.b. Compute for EVPI.c. Determine the range over which each alternative would be best in terms of the valuewhen demand is low.17-5. You are offered the following gamble based on coin flips. If the first head occurs on the first flip , you get $2 IF the first head occurs on the second flip you get $4, and so on, so that is the first head is on the Nth flip , you get $2N. The game ends only when a flip on the coin results in heads. What is the expected value of this gamble? When offered, most people say they would only pay less than $10 to play this game. What are two reasons why people are willing to pay so much less than the expected value?
- DBM Industries produces exclusively an SP Juice in the market under the name DBM Sparkle . The firm’s manager must determine how many bottles to produce before he knows what the market price will be. Assume a competitive market situation. Forecast from the Department of Economics (DOE) revealed that, there is 30 percent chance that the market price will be P80 per liter and a 70 percent chance that it will be P40 per liter when the juice hits the market. If DBM’s cost function is C = 200 + .0005Q2, how much juice should DBM produce to maximize expected profit ? How much is the expected price?Acme Drug Co. has a patent on the drug A-rene, the annual demand for which can be described by the demand curve: Q = 4500 - 300P. Production of the drug requires an annual fixed cost of $3,000 and a per unit marginal cost of $5. (i) How many units of the drug will Acme produce each year, and what price will it charge, in order to maximize its profits? What will be its annual profits? (ii) Now suppose that the Better Drug Co. has discovered B-rene, a new drug which seems to be identical to A-rene in all its effects. If Better enters the market, competition with Acme will conform to a Cournot duopoly. Better’s costs are identical to those of Acme. What would be the equilibrium outcome of this duopoly? Specifically, how much would each firm produce and what would be the price? How much profit would each firm make? Would Better find it profitable to enter the market? (iii) Would it be in the interests of society as a whole for Better Drug to enter into production? Identify the gainers and…Quick answer please If you are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current Salary. You look into opening a small grocery store. Suppose that the store has annual cost of $150,000 for labor, $60,000 for rent and $30,000 for equipment. There is one-half probability that revenues will be $20,000 and a half probability that revenue will be $420,000 a. WHat is your accounting and economic profit?
- Question An incumbent firm Pilly has a product that works well but has the possibility of causing side-effects to users. Both Pilly and an upstart firm Smirck are having the opportunity to develop a new product without the side effects. The following table shows the expected net return (after considering R&D costs, probability of success in product development, and future profits) for each firm under different scenarios. Smirck Invest Smirck Not Invest Pilly: $2.4 m Smirck: -$0.1 m. Pilly Invest Pilly: $4.9 m Smirck: $0 Pilly Not Invest Pilly: $3 m Smirck: $0.4 m Pilly: $5 m Smirck: $0 Assume that the two firms simultaneously choose whether to invest or not. What is the Nash Equilibrium of this game (that is, the action choices of the two firms in the Nash Equilibrium)? Would your answer be different if Pilly is the first mover and commits to its choice before Smirck makes its response (that is, a sequential-move game)? Equilibrium in the simultaneous-move game (No need for…You are the manager of Zokia Ghana Limited, a producer of beans. In Ghana, it is possible to produce beans or groundnut using the same resources. Therefore, producers are able to sw itch from beans to groundnut production depending on market conditions. Consequently, Zokia consulted an Economist who estimated the demand function for beans as: Qbd = 600 – 4Pb – 0.03M – 12Pg + 15T + 6Pe + 1.5N where Qbd is the quantity demanded of beans each month, ?? is the average price of beans (in Ghana Cedis), M is the average household income (in GH¢), ?? is the price of groundnut (in GH¢), T is a consumer taste index ranging in value from 0 to 10 (the highest rating), ?? is the price (in GH¢) consumers expect to pay next month for beans, and N is the number of buyers in the market for beans. Assume the following initial values: ??=5, ??= 40, T= 6.5, Pe= 5.25, N= 2000, Qbd = 2479 Explain to your Board of Directors why management should be worried about a rise in the price of groundnut.You are the manager of Zokia Ghana Limited, a producer of beans. In Ghana, it is possible to produce beans or groundnut using the same resources. Therefore, producers are able to sw itch from beans to groundnut production depending on market conditions. Consequently, Zokia consulted an Economist who estimated the demand function for beans as: Qbd = 600 – 4Pb – 0.03M – 12Pg + 15T + 6Pe + 1.5N where Qbd is the quantity demanded of beans each month, ?? is the average price of beans (in Ghana Cedis), M is the average household income (in GH¢), ?? is the price of groundnut (in GH¢), T is a consumer taste index ranging in value from 0 to 10 (the highest rating), ?? is the price (in GH¢) consumers expect to pay next month for beans, and N is the number of buyers in the market for beans. Assume the following initial values: ??=5, ??= 40, T= 6.5, Pe= 5.25, N= 2000, Qbd = 2479 Determine the equation of the demand curve for beans