A plant manager wants to know how much he should be willing to pay for perfect market research. Currently there are two states of nature facing his decision to expand or do nothing. Under favorable market conditions, the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions, the large plant would lose $50,000 and the small plant would make $0. If the two states of nature are equally likely, how much should he pay for perfect information? a. $0 b. $50,000 c. $100,000 d. $25,000

Will improving customer service result in higher stock prices for the companies providing the better service? "When a company's satisfaction score has improved over the prior year's results and is above the national average (currently 75.7), studies show its shares have a good chance of outperforming the broad stock market in the long run." The following satisfaction scores of three companies for the 4th quarters of two previous years were obtained from the American Customer Satisfaction Index. Assume that the scores are based on a poll of 52 customers from each company. Because the polling has been done for several years, the standard deviation can be assumed to equal 4 points in each case. Company Year 1 Score Year 2 Score Rite Aid 74 76 Expedia 76 J.C. Penney 76 77 79 a. For Rite Aid, is the increase in the satisfaction score from year 1 to year 2 statistically significant? Use a = .05 and null hypothesis is Hoμ1-2 ≤0. What can you conclude? z value (to 2 decimals) p-value (to 4…

A company is considering whether to develop and market a particular product. There is 40% probability that the research and development department will come up with a viable product, and a 60% probability that the product will be scrapped. The cost of undertaking the research and development is 200 000. If the product development is successful, the company will build a plant. The product demand is unknown, and the company has the choice of building a large or small plant. The expected demand and the net present value is shown below:   High Demand Low Demand ACTION Probability 75% Probability 25% Large Plant N$1 600 000 N$400 000 Small Plant N$1 000 000 N$1 000 000 Required: Advise the company on the most beneficial course of action using a decision tree.

A decision maker faces with the following four alternatives and four states of nature in the profit payoff table below: B. Cal D. Calculate the expected value of perfect to the nearest integer: 1, A2, A3, or A4. 3 States of nature S3 8 0.1

Construct and submit a Decision Tree that depicts the information provided in the case to either continue developing a new software product or to abandon the project due to its high cost and uncertain market potential. In addition, you must provide an explanation of your decision tree and support your decision with the literature.

Imagine that you have the following pair of concurrent decisions. First examine both decisions, then indicate the options you prefer. Decision 1: Choose betweenA a sure loss of 1500B a 75% to lose £2000 and 25% chance to lose nothing Decision 2: Choose betweenC a sure gain of £480D a 25% chance to gain £2000 and 75% chance to gain nothing How do you think respondents in a laboratory experiment would decide in Decision 1 and Decision 2?  most participants will choose 1B and 2C most participants will choose 1A most participants will choose 1B and 2D most participants will choose 1A and 2D  2) Which of the following can explain the behavior in the lab for decision 1? preference for certainty underestimation of large probabilities individuals are risk loving in the loss domain overweighting of small probabilities concavity of the value function in the gain domain 2. individuals are risk loving in the loss domain