the questions are in screenshots below

The next 15 questions refer to the following scenario: A car manufacturer can launch either a new luxury sedan (L) or a new high-performance sports car (5). 0 The car company expects that there is a p=0.7 chance that the luxury sedan will be a hit, and a (1-p}=0.3 chance that it will be a flop. 0 The car company expects that there is a q=0.6 chance that the high-performance sports car will be a hit, and a (1-0) = 0.4 chance that it will be a flop. 0 If the luxury sedan will be a hit, the company earns $3 Million; if it is a flop, it still earns $2 Million. 0 If the high-performance sports car will be a hit, the company earns $6 Million; if it is a flop, it loses $2 Million. Question 1 (1 point) How big is the expected payoff from launching the luxury sedan? O 2,600,000 O 2,700,000 O 2,800,000 O 2,900,000 Question 2 (1 point) How big is the expected payoff from launching the high-performance sports car? O 2,600,000 O 2700.000 0 2,800,000 O 2,900,000 uuesuon 11 {1 pomu What is the manager's expected utility from launching the high-performance sports car? C) 351.39 C) 353.14 C) 356.31 C) 353.25 Question 12 (1 point) Measured by the expected utility, which statement is true? The manager 0 will launch the luxury sedan Q will launch the high-performance sports car 0 is indifferent between launching the luxury sedan and the high-performance sports car. 0 should launch a high-performance luxury sedan without any market study. Question 13 (1 point) Holding constant p an q, the payoffs for the luxury sedan under each scenario, and the payoff for the high-performance sports car under the flop scenario, how big would the payoff for the high performance sports under the hit scenario have to be for the manager to choose the high-performance sports car? (Round to full numbers zero decimals). 0 $2,425,356 0 $4,253,333 0 $5,425,352 0 $6,425,352 Question 14 (1 point) Which statement is true? 0 It is reasonable to assume that large companies are risk neutral and individuals risk averse. Q It is reasonable to assume that individuals are risk neutral and large companies risk averse. 0 It is reasonable to assume that both individuals and large companies are risk neutral. 0 It is reasonable to assume that both individuals and large companies are risk averse. Question 15 (1 point) Which statement describes a good decision-making process best? 0 Think backwards, reason backwards 0 Think forwards, reason forwards 0 Think backwards, reason forwards 0 Think forwards, reason backwards Decision Analysis - Mainstream Image vs. Luxury Brand Image The next 20 questions refer to the following scenario: A car company is considering a campaign to change its image from a mainstream to a luxury brand. If it decides to create a new image, the success will depend on the macroeconomic environment, which can be either booming (B), stagnating (S), or deteriorating (D). o The payoffs associated with a booming, stagnating, and deteriorating macroeconomic environment are $600, $200, and $100, respectively. 0 The car company evaluates the probabilities of a booming, stagnating, and deteriorating economy at p(B)=0.3, p(S)=0.5, and p(D)=0.2. - If the company decides to go with its current image, its payoff is $350, regardless of the macroeconomic environment. Question 16 (1 point) Which statement is true? 0 The expected payoff from the current mainstream brand image is higher than from the new one. 0 Assuming risk aversion with U(Payoff)=sqrt(Payoff), the expected utility from the current mainstream brand image is higher than from the new one. 0 Both a. and b. are correct. 0 None of the above is correct. Question 17 (1 point) The expected payoff from the new luxury brand image is Question 18 (1 point) Measured by payoffs (risk neutrality), what is the expected value of perfect information? Question 19 (1 point) Measured by payoffs (risk neutrality), what is the maximum willingness to pay for perfect information? Question 20 (1 point) Measured by utility [assuming U(Payoff)=sqrt(Payoff)], what is the expected utility of perfect information? Question 3 (1 point) Measured by the expected payoffs, which statement is true? The car manufacturer O should launch the luxury sedan 0 should launch the high-performance sports car O is indifferent between launching the luxury sedan and the high-performance sports car. 0 should launch a high-performance luxury sedan without ant market study. Question 4 (1 point) Measured by the expected payoffs and holding constant q, for what range of p is launching the luxury sedan always the best choice? O p>0.6 Q p>0.7 O p>0.8 O p>o.9 Question 5 (1 point) Measured by the expected payoffs and holding constant p, for what range of q is launching the high-performance sports car always the best choice? O q>0.5875 O q>0.6125 O q>0.625 O q>0.65 Assume next that a risk averse manager needs to make the decision to launch either the luxury sedan or the high-performance sports car. The manager has a base salary of $100,000 plus an incentive package. The incentive package either increases or decreases the base salary, depending on the success of the new car. For every extra dollar earned with the new car, the manager's base salary increases by one cent. Likewise, for every dollar lost with the new car, the manager's base salary decreases by 1 cent. The manager's income utility function is U(lncome)=sqrt(lncome). Question 6 (1 point) If the manager decides to launch the luxury sedan and it is a hit, what will be the manager's total income? 0 $30,000 0 $120,000 0 $130,000 0 $160,000 Question 7 (1 point) If the manager decides to launch the luxury sedan and it is a flop, what will be the manager's total income? 0 $80,000 0 $120,000 0 $130,000 O $160,000 Question 8 (1 point) If the manager decides to launch the high-performance sports car and it is a hit, what will be the manager's total income? 0 $30,000 O $120,000 0 $130,000 O $160,000 Question 9 (1 point) If the manager decides to launch the high-performance sports care and it is a flop, what will be the manager's total income? O $30,000 0 $120,000 O $130,000 O $160,000 Question 10 (1 point) What is the manager's expected utility from launching the luxury sedan? C) 351.89 O 353.14 O 356.31 O 358.25