Carla is the CEO of a rising entertainment startup, Cardinal Clips, and she needs to decide on the marketing strategy for their newest product, and she thinks that there are two alternatives: Going heavy on a social media campaign. Partnering with HBO Max as an add-on bundle for their subscription service. Her team has projected the following bottom line results for different scenarios: Product flops, social media campaign - $250k $200k Product successful, social media campaign Product viral, social media campaign $1M Product flops, HBO Max partnership $10k Product successful, HBO Max partnership $100k Looking at the range of the dollar prospects, Carla decides it is reasonable to behave as a risk-neutral decision maker because the company's risk tolerance is $5M. Carla's business development team has also provided the following information, which she believes is an adequate representation of her probabilities for each outcome: P{flops social media campaign 0.3 P{successful social media campaign 0.65 P{viral social media campaign 0.05 P{flops | partnership} 0.2 P{successful partnership} 0.8 Consider the following statements: I. II. Carla prefers the social media campaign. She values the deal at $100K or less. Which of the statements must be true? A consulting firm has contacted Carla offering a detailed market analysis of the social media campaign which tells her if the product will flop (given that she chooses the social media campaign) with a sensitivity and specificity of 90%. She believes that they can only detect whether it will flop, and they will make the same forecast if it will be successful or if it will go viral. Let x be the maximum amount Carla should be willing to pay the consulting firm for the market analysis. In what range does x lie? a) $Ok