Question: Suppose a studio manager is thinking about whether or not to produce a movie ( movie X ) . A movie can become a blockbuster
Suppose a studio manager is thinking about whether or not to produce a movie movie X A movie can become a blockbuster which will generate a net profit of $M or it can become a failure in which case it will generate a loss of $M The studio manager estimates that movie X has a chance of becoming a blockbuster or a failure. Now a marketing research company offers to provide a research service that allows the studio to know in advance whether movie X will be a blockbuster or a failure There is probability that the research company says that the movie is a blockbuster and probability that the research company says that the movie is a failure How much in terms of $ is this marketing research service worth to the studio?
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