# Suppose you have invested in a new computer company whose profitability depends on two? factors:...

## Question:

Suppose you have invested in a new computer company whose profitability depends on two factors:

(1) whether the U.S. Congress passes a tariff raising the cost of Japanese computers and

(2) whether the U.S. economy grows slowly or quickly. What are the four mutually exclusive states of the world that you should be concerned about The mutually exclusive states of the world are

A. slow growth with a tariff, slow growth without a tariff, fast growth with a tariff, and fast growth without a tariff.

B. the effect of slow growth on your company, the effect of slow growth on Japanese companies, the effect of fast growth on your company, and the effect of fast growth on Japanese companies.

C. slow growth, fast growth, a tariff, and no tariff.

D. a tariff and your computer company, a tariff and no computer company, no tariff and your computer company, and no tariff and no computer company.

E. slow growth with high profit in Japan, slow growth with low profit in Japan, fast growth with high profit in Japan, and fast growth with low profit in Japan.

## Mutually Exclusive Events

The events are mutually exclusive if they cannot happen at the same time. In other words, the probability that any two or more of mutually exclusive events occur at the same time is zero.

In this case, there are four mutually exclusive events that might occur:

1. The U.S. Congress passes a tariff and the U.S. economy grows slowly
2. The U.S. Congress passes a tariff and the U.S. economy grows quickly
3. The U.S. Congress does not pass a tariff and the U.S. economy grows slowly
4. The U.S. Congress does not pass a tariff and the U.S. economy grows quickly

Hence, the correct answer is A. slow growth with a tariff, slow growth without a tariff, fast growth with a tariff, and fast growth without a tariff