Use the information for the question(s) below.
Big Cure and Little Cure are both pharmaceutical companies. Big Cure presently has a potential "blockbuster" drug before
the Therapeutic Goods Administration (TGA) waiting for approval. If approved, Big Cure's blockbuster drug will produce $1
billion in net income for Big Cure. Little Cure has ten separate, less important drugs before the TGA waiting for approval. If
approved, each of Little Cure's drugs would produce $100 million in net income for Little Cure. The probability of the TGA
approving a drug is 50%
-What is the expected payoff for Big Cure's Blockbuster drug?
A) $1 billion
B) $500 million
C) $100 million
D) $0
Correct Answer:
Verified
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