Mark has two alternatives.There is a 50 percent chance that he will earn $120,000 if he accepts a government contract.If he decides not to accept the contract and instead continues on his present project, he has an 80 percent chance of earning $100,000.If Mark is a perfectly rational decision maker, which of the following statements is TRUE?
A)He will accept the government contract.
B)His expected value of continuing on the present project is $80,000.
C)He will attempt to satisfice.
D)He will ignore economic criteria in making his decision.
E)He will revise his earnings estimate on the government contract to make it more attractive.

Question

Quizplus · Accepted Answer

The expected value of continuing on the present project is calculated as 0.80 * $100,000 = $80,000, which matches option B.

Mark Has Two Alternatives