The television production company ZVTV Productions has developed a script for a pilot episode of a new television series called...

GMAT Multi Source Reasoning : (MSR) Questions

Source: Mock

Multi Source Reasoning

Case Study

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Situation

Debate

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The television production company ZVTV Productions has developed a script for a pilot episode of a new television series called Whatsit. The following gives information about all the costs and revenues that would arise, depending on the decisions made.

The cost of the script development, in Hong Kong dollars, was HK$ 100,000. The rival production company Vidrama has offered to buy the script and all the intellectual-property (IP) rights for the series from ZVTV Productions for HK$800,000, its final offer.

ZVTV Productions could reject Vidrama's offer, spend HK$400,000 to produce the pilot episode, and try to sell the IP rights for the series to the television network Teevisio. If Teevisio accepted the pilot, they would pay HK$2,000,000 to acquire all the IP rights for the script, pilot, and series. However, if Teevisio rejected the pilot, neither Vidrama nor any other company would buy any of the IP rights mentioned.

Before deciding whether to accept Vidrama's offer, ZVTV Productions could pay the consulting firm Critico to evaluate Whatsit and assess the likelihood that Teevisio would buy all the IP rights for the script, pilot, and series. Critico would charge HK$100,000.

Ques. 1/3

For each of the following questions shown on the decision tree and indicating one or more decision points, select Yes if the information provided suggests that the decision(s) involved would be made by Teevisio. Otherwise, select No.

Yes

All IP rights Purchased?

Yes

Positive evaluation of script?

Yes

Sell script to Vidrama?

Solution

Owning the Dataset

Understanding Source A: Text - Situation Description

Information from Dataset	Analysis
""The cost of the script development, in Hong Kong dollars, was HK$ 100,000""	Script development has already been paid - this is money already spent Key Finding: Script development is a sunk cost that shouldn't affect future decisions
""Vidrama has offered to buy the script and all the intellectual-property (IP) rights for the series from ZVTV Productions for HK$800,000, its final offer""	Vidrama wants to buy everything for HK$800,000 ""Final offer"" means no negotiation possible Key Finding: This is a guaranteed revenue option with no risk
""spend HK$400,000 to produce the pilot episode, and try to sell the IP rights for the series to the television network Teevisio""	Alternative option requires spending more money first Key Finding: This path involves additional investment and more risk
""If Teevisio accepted the pilot, they would pay HK$2,000,000""	Teevisio would pay much more than Vidrama Key Finding: Potential upside is 2.5x Vidrama's offer
""if Teevisio rejected the pilot, neither Vidrama nor any other company would buy any of the IP rights""	If Teevisio says no, there's no backup buyer Key Finding: Rejection means total loss of sale opportunity
""Critico would charge HK$100,000""	Getting expert evaluation costs money Key Finding: Information gathering has a cost that must be factored into decision

Summary: ZVTV must choose between accepting Vidrama's guaranteed HK$800,000 offer or investing HK$400,000 more to potentially earn HK$2,000,000 from Teevisio, with an option to pay HK$100,000 for expert evaluation first.

Understanding Source B: Text - Executive Debate

Information from Dataset	Analysis
""Ms. Chen recommends that, rather than accept Vidrama's offer, ZVTV take steps to gain significantly more profit from Whatsit""	Ms. Chen wants to go for the bigger profit Connection to Source A: Ms. Chen favors the higher-risk, higher-reward path Connection to Source A: She prefers pursuing Teevisio's HK$2,000,000 potential over Vidrama's HK$800,000 guarantee
""Mr. Huang recommends that ZVTV Productions follow the course of action that involves the least risk of losing money""	Mr. Huang wants to avoid losing money Connection to Source A: Mr. Huang is risk-averse and prioritizes safety Connection to Source A: He likely favors Vidrama's guaranteed offer since producing the pilot risks total loss
""Ms. Zhao recommends that ZVTV Productions hire Critico and base all further decisions on Critico's evaluations""	Ms. Zhao wants expert opinion before deciding Connection to Source A: Ms. Zhao values data-driven decision making Connection to Source A: She wants to spend the HK$100,000 evaluation cost to make a more informed choice

Summary: Three executives propose different strategies based on their risk preferences: Ms. Chen seeks maximum profit (Teevisio path), Mr. Huang minimizes risk (Vidrama path), and Ms. Zhao wants expert evaluation before deciding.

Understanding Source C: Visual - Decision Tree Options

Chart/Table Analysis:

The decision tree shows all possible paths ZVTV can take with probability estimates
Key patterns observed:
- Three initial choices: hire Critico or go straight to selling decision
- All paths selling to Vidrama end in ""Profit""
- All paths where pilot is produced but rejected end in ""Loss""
Key Finding: The tree structure reveals that evaluation is optional and the Vidrama decision can be made at any point
Key Finding: Success probabilities vary dramatically based on evaluation results (80% if positive, 30% if negative, 60% without evaluation)

Probability Analysis:

Connection to Source A: The 60% success rate without Critico represents the baseline odds of Teevisio accepting
Connection to Source B: Ms. Chen provides these probability estimates, supporting her profit-maximizing recommendation with her belief in favorable odds
Key Finding: The evaluation transforms uncertain 60% odds into either favorable 80% or unfavorable 30% odds

Key Decision Points:

""Positive evaluation of script? Yes: 60%, No: 40%"" shows Critico's expected assessment split
Connection to Source B: This explains why Ms. Zhao values evaluation - it provides crucial information that dramatically shifts success probability
Connection to Source A: The difference between 80% and 30% success rates justifies the HK$100,000 evaluation cost for risk management

Summary: The decision tree reveals that hiring Critico provides valuable information that significantly changes success probability assessments (80% vs 30%), explaining why evaluation might be worth its cost despite not changing the average expected outcome.

Overall Summary

ZVTV Productions faces a classic risk-versus-reward decision: accept Vidrama's guaranteed HK$800,000 or invest HK$400,000 more for a chance at HK$2,000,000 from Teevisio
The three executives represent different approaches:
- Ms. Chen: favors maximum profit
- Mr. Huang: prefers minimum risk
- Ms. Zhao: wants data-driven decisions through Critico's evaluation
The decision tree shows that evaluation doesn't change average success probability (60%) but provides crucial information that reveals either very favorable (80%) or unfavorable (30%) odds
This helps ZVTV make a more informed choice about whether to pursue the high-risk, high-reward path

Question Analysis

Core Question: For each decision point in the tree, determine if Teevisio is the entity making that specific decision
Key Requirements:
- Focus on WHO makes the decision
- Specifically whether it's Teevisio
- Three decision points to evaluate
Answer Type Needed: Entity identification for decision-making

Connecting to Our Analysis

The analysis clearly identifies each entity's role:
- Teevisio: potential IP purchaser
- Critico: evaluator
- ZVTV: production company
- Vidrama: rival buyer
Can Answer from Analysis: YES

Statement Evaluations

Statement 1 Evaluation

Question: All IP rights Purchased? - Is this Teevisio's decision?

Teevisio decides whether to pay HK$2,000,000 for IP rights
Decision occurs after pilot production
Teevisio is the purchasing entity
Result: YES - Teevisio makes this decision

Statement 2 Evaluation

Question: Positive evaluation of script? - Is this Teevisio's decision?

Critico performs the evaluation
Evaluation happens if hired by ZVTV
Critico, not Teevisio, evaluates
Result: NO - Critico makes this evaluation

Statement 3 Evaluation

Question: Sell script to Vidrama? - Is this Teevisio's decision?

ZVTV decides whether to accept Vidrama's offer
Decision available at multiple points
ZVTV, not Teevisio, makes this choice
Result: NO - ZVTV makes this decision

Cross-Reference Check

Source A clearly identifies Teevisio as the network that might purchase IP rights
Critico is consistently identified as the evaluation consultant
ZVTV is the production company making all strategic decisions about their script
Decision tree structure confirms these entity relationships

Final Answer

Statement 1: YES, Statement 2: NO, Statement 3: NO

Answer Choices Explained

Yes

All IP rights Purchased?

Yes

Positive evaluation of script?

Yes

Sell script to Vidrama?

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