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Managerial Economics · End Term · 10 May 2026 · January 2026 term · Set 1-2

Question 19: Expected value of second product is _\ NOTE: Enter the e…

Question 19

+1 markWritten answer

Consider two investment opportunities in new products: gourmet marmite and gourmet honey. People might either really like or really dislike the gourmet marmite, so it generates a payoff of $0.5 with 30 percent probability, a payoff of $1 million with 40 percent probability and a payoff of $1.5 million with 30 percent probability. The gourmet honey is less likely to either really turn people off or really turn them on, so it has a payoff of $0.5 million with 20 percent probability, $1 million with 60 percent probability and $1.5 million with 20 percent probability.
Based on the above data, answer the given subquestions.

Expected value of second product is _____________
NOTE: Enter the exact answer without any extra space in the beginning or at the end. Answers Case Sensitive : No

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Correct answer: 1 million

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Question 19 of 36 in the IIT Madras BS Managerial Economics (Managerial Economics) End Term paper sat on 10 May 2026, in the January 2026 term (Managerial Economics 06 May 26). It carries 1 mark.

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