A firm hires an economist to conduct market research and determine demand for a new product.If the test is correct and the firm launches the product,it earns a profit of $600,000.If the firm launches the product when there is weak demand,it incurs a loss of $250,000.

What is the firm's expected profit from an accurate and inaccurate test respectively? What can you conclude about the quality of the market research?

Question

A firm hires an economist to conduct market research and determine demand for a new product.If the test is correct and the firm launches the product,it earns a profit of $600,000.If the firm launches the product when there is weak demand,it incurs a loss of $250,000.
 
 What is the firm's expected profit from an accurate and inaccurate test respectively? What can you conclude about the quality of the market research?

Quizplus · Accepted Answer

The Answer of A firm hires an economist to conduct market research and determine demand for a new product.If the test is correct and the firm launches the product,it earns a profit of $600,000.If the firm launches the product when there is weak demand,it incurs a loss of $250,000.
 
 What is the firm's expected profit from an accurate and inaccurate test respectively? What can you conclude about the quality of the market research?

A Firm Hires an Economist to Conduct Market Research and Determine