A company producing apps for a social networking site is deciding which path to pursue. The first is to create an app that has universal appeal but faces a crowded market. This app, A, would have sales of 100,000 copies at $1 each under ideal conditions, but under tough conditions would have sales of only 60,000 copies at $.80 each. The other app, B, would have sales of 500,000 units at $.50 each under ideal conditions but sales would be reduced to 10,000 units at $.50 each under tough conditions. If ideal and rough conditions occur with the same frequency, which app should the company produce? Note: both apps cost the same amount to develop.

A social networking service is referred to as an online platform that allows people to develop social networks or relationships with others who have identical academic or work goals, hobbies, experiences, or real-life contacts.  The format and number of options provided by social networking services differ.

The answer is the company should produce App B.

a) Data and Calculations:

App A

Ideal condition Sales = 100,000 at $1 = $100,000

Tough condition Sales = 60,000 at $0.80 = $48,000

Expected Sales Revenue under ideal = $100,000 * 50% = $50,000

Expected Sales Revenue under tough = $48,000 * 50% = $24,000

Total sales = $74,000

App B:

Ideal condition Sales = 500,000 at $0.50 = $250,000

Tough condition Sales = 10,000 at $0.50 = $5,000

Expected Sales Revenue under ideal = $250,000 * 50% = $125,000

Expected Sales Revenue under tough = $5,000 * 50% =       $2,500

Total sales = $127,500

b) App B yields a total expected sales revenue of $127,500 as compared to App A's $74,000.

To know more about the calculation of both the apps, refer to the link below:

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The company should produce App B.

Explanation:

a) Data and Calculations:

App A

Ideal condition Sales = 100,000 at $1 = $100,000

Tough condition Sales = 60,000 at $0.80 = $48,000

Expected Sales Revenue under ideal = $100,000 * 50% = $50,000

Expected Sales Revenue under tough = $48,000 * 50% = $24,000

Total sales = $74,000

App B:

Ideal condition Sales = 500,000 at $0.50 = $250,000

Tough condition Sales = 10,000 at $0.50 = $5,000

Expected Sales Revenue under ideal = $250,000 * 50% = $125,000

Expected Sales Revenue under tough = $5,000 * 50% =       $2,500

Total sales = $127,500

b) App B will yield a total expected sales revenue of $127,500.  This is far better than App A's $74,000.

the correct answer is:

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