Description
Problem Set #6
1. Transcendent Technologies is deciding between developing complicated, thought-activated software, or simple, voice-activated software. The voice-activated software would cost $50 million to develop and has a 60% chance of being successfully launched and generating revenue of $100 million. The thought-activated software would be a bonanza if successful, generating $1 billion in revenue. But it is so complicated, it is projected to cost would be $400 million. How likely would success have to be for Transcendent Technologies to opt for the thought-activated software?
2. At an oral auction for used car, half of all bidders have a value of $1,500 and half have a value of $1,900. What is the expected winning bid if there are three bidders?
Explanation & Answer
Hi. Here is the solution. I have tried to explain every step as much detailed as I could be. If you need any further guidance just let me know and I will be available to help. Thank you!
Running Head: SOLVING ECONOMIC PROBLEMS
Solving Economic Problems
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SOLVING ECONOMIC PROBLEMS
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Question 1
The first step would be evaluating the amount of profit that would be expected to be obtained
from the voice-activated software. That can be found by finding the diff...