Determine the best course of action

Assignment Help Managerial Economics
Reference no: EM1371835

A European consortium has spent a considerable value of time and money developing a new supersonic aircraft. The aircraft gets high marks on all performance measures except noise. In fact, b/c of the noise, the consortium's management is concerned that the US government may impose restrictions at some of the American airports where the aircraft can land. Management judges a 50-50 chance that there will be some restrictions. Without restrictions, management estimates its (present discounted) profit at $125 million; with restrictions, its profit would be only $25 million. Management must decide now, before knowing the governments decision, whether to redesign parts of the aircraft to solve the noise problem (in which case, full landing rights are a certainty) and a .4 chance it will fail. Using a decision tree, determine the consortium's best course of action, assuming management is risk Neutral.

Reference no: EM1371835

Questions Cloud

Advantage of economies of scale : Provide an example of an airline or aviation firm trying to take advantage of economies of scale. Do you think they are/were successful? In what way?
Description of monopolist : Discuss why a monopolist should lower its quantity relative to the perfectly competitive market to maximize profits. Make sure to elaborate employ examples.
Dominant price leadership : Dominant price leadership exists when one company drives others out of the market. The dominant company decides how much each of its competitors can sell.
Find data transmission rate in bits per second of system : Assume that the airliner carries 10,000 kg of those floppies at the speed of 1000 km/h over the distance of 5000 km. Determine the data transmission rate in bits per second of this system?
Determine the best course of action : A European consortium has spent a considerable value of time and money making a new supersonic aircraft. The aircraft gets high marks on all performance measures except noise.
Fast food restaurant production function : I believe that fast food restaurants show short run production function because of the one fixed input, capital. But, I need to elaborate more and produce the production function equation Q=F (L,K,M...) Can you please help?
Explain llc and mac : Explain two layers: LLC & MAC, and how are they different from what is available in TCP/IP protocol? Why do we require these two extra layers for LAN?
Calculate firm profit : Suppose you are the manager of a company that produces products X and Y at zero cost. You know that different types of consumers value your two products differently,
Draw and implement abstract base class : Draw and implement the abstract base class ArithmeticExpression which represent any binary (having two arguments) arithmetic expression.

Reviews

Write a Review

Managerial Economics Questions & Answers

  Marginal physical product of labor

Use the following information for a company's output at various levels of employment to compute: its marginal physical product of labor schedule; its schedule,

  Explain growth maximisation model of morris

Describe critically growth maximisation model of morris - Grade Level : Post Graduate Level

  Determine the optimal package price

The American Baker's Association reports that yearly sales of bakery goods last year rose 15%, driven by a 50% increase in the demand for bran muffins

  Effective cross cultural management

MNCs have business units in different geographic areas. This leads to interaction in different languages and cultures.

  Prepare a marginal cost analysed income statement for 2014

Prepare a Marginal Cost Analysed Income Statement for 2014 from the above data to identify total and individual medical procedure contributions and profits.

  Determine sales

David Ding advertises on a local radio station. For last 6-weeks, the manager has kept records of the number of minutes of advertising that were bought, and the sales for that week.

  Coordination of the activities of a business

The organization and coordination of the activities of a business in order to achieve defined objectives.

  Determine autocorrelation function of a rectangular pulse

Prepare the sketch the Fourier transform of a rectangular pulse of amplitude 10 V and width 0.1 second that is centered on the zero time axis. Determine the autocorrelation function of a rectangular pulse.

  Calculate time weighted rate of return

A portfolio manager is being evaluated based on the time-weighted average rate of return. If the manager had achieved annual returns for the past three years of 2.5 percent, 14.5 percent and 9 percent on one initial investment of $500,000,

  Colleges and universities professor salaries

At several universities and colleges, business professors receive higher salaries than professors in others fields. Why might this be the case?

  Analyzing current pricing decisions

Price comparison services on the Internet are a popular way for retailers to promote their products and a convenient way for customers to simultaneously obtain price quotes from many firms setting I identical product.

  Determine the official measure of the deficit

Determine the official measure of the deficit

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd