In a bad economy, a CEO has a 10% chance of meeting earnings estimates at regular effort, and a 15% chance at extraordinary effort. Extraordinary effort costs the CEO $10,000. How large a bonus should the CEO be paid for meeting estimates to encourage extraordinary effort? $10,000 $100,000 $200,000 $250,000 $1,000,000

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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In a bad economy, a CEO has a 10% chance of meeting earnings estimates at regular effort, and a 15% chance at extraordinary effort. Extraordinary effort costs the CEO $10,000. How large a bonus should the CEO be paid for meeting estimates to encourage extraordinary effort?

$10,000

$100,000

$200,000

$250,000

$1,000,000

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