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 $60,000. If it is not better and they replace the old product with the new product on the market, they will lose $22,000 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 $20,000 if it is not. Complete parts (a) and (b) below. (a) Prepare a payoff matrix. (Type an integer or decimal for each matrix element. Do not include the $ symbol in your answer.) (b) If management believes that the probability that the new product is better is 0.5, 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.) O A. The expected profits are $ if they market the product and S if they do not. They should market the product because they will lose less if they do. O B. The expected profits are $ if they market the product and S if they do not. They should market the product because they will earn more if they do so. O C. The expected profits are $ if they market the product and S if they do not. They should not market the product because they will earn more if they do not. O D. The expected profits are $ if they market the product and S if they do not. They should not market the product because they will lose less if they do not.

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1. Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that “the enormous imports of cheap bananas into the United States tend to curtail the domes-tic consumption of fresh fruits produced in the United States.”. a. Was the apple producer assuming that apples and bananas are substitutes or complements? Briefly explain. b. If a tariff on bananas acts as an increase in the cost of supplying bananas in the United States, use two demand and supply graphs to show the effects of the apple producer’s proposal. One graph should show the effect on the banana market in the United States, and the other graph should show the effect on the apple market in the United States. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.

Dollars 9 490 MC ATC 9 MR Output h] Refer to the diagram. Equilibrium price is Mutiple Choice