A company that manufactures designer jeans is contemplating whether to increase its advertising budget by $1 million for next year.If the expanded advertising campaign is successful,the company expects sales to increase by $1.6 million next year.If the advertising campaign fails,the company expects sales to increase by only $400,000 next year.If the advertising budget is not increased,the company expects sales to increase by $200,000.
-Identify the payoff in this decision-making problem.

Question

Quizplus · Accepted Answer

The payoff in this decision-making problem is the increase in sales dollars next year, which is the result of the decision to increase or not increase the advertising budget and whether the campaign is successful or not.

A Company That Manufactures Designer Jeans Is Contemplating Whether to Increase