A manager must determine which of two products to market. From market studies, the manager constructed the following payoff matrix of the present value of all future net profits under all the different possible states of the economy:

Product 1

State of the economy

Probability

Boom 0.2 Normal 0.5 Recession 0.3

Probability

Profit ($)

50 20 0

Product 2

State of the economy

Probability

Boom 0.2 Normal 0.4 Recession 0.4

Profit ($)

30 20 10

The manager's utility function for money is

U = 100M-M2

where U is the total utility of money (in utils) and M refers to the dollars of profit.(A)Determineif this manager a risk seeker, risk neutral, or a risk averter.

(B)If the manager's objective was profit maximization regardless of risk, which product should the manager introduces?

(C)Evaluate the risk associated per dollar of profit with each product.

(D)If the manager's objectives were utility maximization, which product should the managerintroduce? (Hint: in this section, you can assume the same probability distribution indicated in the table above.)