Your ďŹrm is considering investing in a new product. Marketing research has determined that the sales of the new product depend, in large part, on the whether or not competitors jump in to mimic the product. Their assessment of sales, and the likelihood of mimicking is as follows:
| Competitor ’ s Reaction | Probability | Sales |
| Mimic | 80% | $1,000,000 |
| Do not mimic | 20% | $10,000,000 |
a. What are the expected sales from this new product?
b. What is the standard deviation of possible sales of this new product?
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