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 $10M, or it can become a failure, in which case it will generate a loss of $4M. The studio manager estimates that movie X has a 50-50 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 50% probability that the research company says that the movie is a blockbuster and 50% 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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