Required a) Using expected values as the basis of your decision, advise the theatre b) Prepare a two-way data table to show the profit values that could occur fronm c) Explain, using the probabilities provided and your answer to (b) above, how the management whether it is financially worthwhile to engage MS for the concert. deciding to engage MS for the concert. two-way data table can be used by the theatre management to evaluate the financial risks of the concert, including the probability of making a profit. d) Calculate the maximum price that the theatre management should agree to pay for perfect information relating to the size of the audience and the level of contribution from confectionery sales.
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1 of 2 Workshop Decision Making Under Conditions of Risk and Uncertainty Question 1 A theatre has a seating capacity of 500 people and is considering engaging MS and her orchestra for a concert for one night only. The fee that would be charged by MS would be $10,000. If the theatre engages MS, then this sum is payable regardless of the size of the theatre audience. Based on past experience of events of this type, the
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