The research department at a manufacturing company has developed a new process that it believes will result in an improved product. Management must decide whether to go ahead and market the new product. The new product may or may not be better than the old one. If the new product is better and the company decides to market it, sales should increase by $50,000. If it is not better and they replace the old product with the new product on the market, they will lose $24,000 to competitors. If they decide not to market the new product, they will lose a total of $30,000 if it is better and just research costs of $10,000 if it is not. Answer parts a through c below. (a) Prepare a payoff matrix 0 (Type an integer or decimal for each matrix element. Do not include the $ symbol in your answer.) (b) If management believes there is a probability of 0.4 that the new product is better, find the expected profits under each strategy and determine the best action. Select the correct answer below and fill in the answer boxes to complete your choice (Type integers or decimals.) OA. The expected profits are $ OB. The expected profits are $ OC. The expected profits are $ OD. The expected profits are S if they market the product and $ if they market the product and S if they market the product and $ if they market the product and $ (e) Find any dominated strategies. Select all that apply. A. Column 1 dominates column 2 C. Row 2 dominates row 1. E. There are no dominated strategies. Is there a saddle point? OA. There is a saddle point, it is 5 if they do not. They should market the product because they will lose less if they do. if they do not. They should market the product because they will earn more if they do so. if they do not. They should not market the product because they will lose less if they do not. if they do not. They should not market the product because they will earn more if they do not (Type an integer or a decimal. Do not include the $ symbol in your answer) OB. There is no saddle point B. Row 1 dominates row 2. D. Column 2 dominates column 1.

The research department at a manufacturing company has developed a new process that it believes will result in an improved product. Management must decide whether to go ahead and market the new product. The new product may or may not be better than the old one. If the new product is better and the company decides to market it, sales should increase by $50,000. If it is not better and they replace the old product with the new product on the market, they will lose $24,000 to competitors. If they decide not to market the new product, they will lose a total of $30,000 if it is better and just research costs of $10,000 if it is not. Answer parts a through c below. (a) Prepare a payoff matrix 0 (Type an integer or decimal for each matrix element. Do not include the $ symbol in your answer.) (b) If management believes there is a probability of 0.4 that the new product is better, find the expected profits under each strategy and determine the best action. Select the correct answer below and fill in the answer boxes to complete your choice (Type integers or decimals.) OA. The expected profits are $ OB. The expected profits are $ OC. The expected profits are $ OD. The expected profits are S if they market the product and $ if they market the product and S if they market the product and $ if they market the product and $ (e) Find any dominated strategies. Select all that apply. A. Column 1 dominates column 2 C. Row 2 dominates row 1. E. There are no dominated strategies. Is there a saddle point? OA. There is a saddle point, it is 5 if they do not. They should market the product because they will lose less if they do. if they do not. They should market the product because they will earn more if they do so. if they do not. They should not market the product because they will lose less if they do not. if they do not. They should not market the product because they will earn more if they do not (Type an integer or a decimal. Do not include the $ symbol in your answer) OB. There is no saddle point B. Row 1 dominates row 2. D. Column 2 dominates column 1.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2.5CE

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