Table A.3
Use the following to answer the questions below.
In choosing between three new jobs,Joe MBA considers the potential payoffs over the next three years.The following table contains the payoffs,given the speed of promotion in each of the organizations.The probability of fast promotion is 0.6,and the probability of slow promotion is 0.4.

-Use the information in Table A.3 and the expected-value rule.Which statement is TRUE?
A)The expected value of the consultant job is more than $300,000.
B)The expected value of the utility analyst job is more than $300,000.
C)The expected value of the research assistant job is less than $250,000.
D)The job with the highest expected value is the research assistant.

Question

Table A.3
Use the following to answer the questions below.
In choosing between three new jobs,Joe MBA considers the potential payoffs over the next three years.The following table contains the payoffs,given the speed of promotion in each of the organizations.The probability of fast promotion is 0.6,and the probability of slow promotion is 0.4.
 
-Use the information in Table A.3 and the expected-value rule.Which statement is TRUE?
A)The expected value of the consultant job is more than $300,000. 
B)The expected value of the utility analyst job is more than $300,000. 
C)The expected value of the research assistant job is less than $250,000. 
D)The job with the highest expected value is the research assistant.

Quizplus · Accepted Answer

To find the expected value for each job, we use the formula:
Expected Value = (Probability of Fast Promotion x Fast Promotion Payoff) + (Probability of Slow Promotion x Slow Promotion Payoff)

For Consultant job:
Expected Value = (0.6 x $500,000) + (0.4 x $100,000) = $340,000

For Utility Analyst job:
Expected Value = (0.6 x $350,000) + (0.4 x $200,000) = $290,000

For Research Assistant job:
Expected Value = (0.6 x $150,000) + (0.4 x $100,000) = $120,000

Therefore, the expected value of the consultant job is more than $300,000, the expected value of the research assistant job is less than $250,000, and the expected value of the utility analyst job is less than $300,000. The job with the highest expected value is the consultant job, followed by the utility analyst job. Therefore, the best choice is the consultant job.

Table A.3 Use the Following to Answer the Questions Below