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
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$100,000.
For each of the following questions shown on the decision tree and indicating one or more decision points, select Yes if the information provided suggests that the decision(s) involved would be made by Teevisio. Otherwise, select No.
Owning the Dataset
Understanding Source A: Text - Situation Description
| Information from Dataset | Analysis |
|---|---|
| ""The cost of the script development, in Hong Kong dollars, was HK$ 100,000"" |
|
| ""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"" |
|
| ""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"" |
|
| ""if Teevisio rejected the pilot, neither Vidrama nor any other company would buy any of the IP rights"" |
|
| ""Critico would charge HK$100,000"" |
|
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"" |
|
| ""Mr. Huang recommends that ZVTV Productions follow the course of action that involves the least risk of losing money"" |
|
| ""Ms. Zhao recommends that ZVTV Productions hire Critico and base all further decisions on Critico's evaluations"" |
|
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
All IP rights Purchased?
Positive evaluation of script?
Sell script to Vidrama?