A firm making production plans believes there is a 30% probability the price will be $10,a 50% probability the price will be $15,and a 20% probability the price will be $20.The manager must decide whether to produce 6,000 units of output (A) ,8,000 units (B) or 10,000 units (C) .The following table shows 9 possible outcomes depending on the output chosen and the actual price. If the mean-variance rule is used,how much should the firm produce?
A) 6,000
B) 8,000
C) 10,000
D) cannot use this rule to make the decision
Correct Answer:
Verified
Q29: The following payoff matrix shows the
Q30: A firm is considering the decision
Q31: A firm making production plans believes
Q32: The following payoff matrix shows the
Q33: A firm is considering the decision
Q35: The following payoff matrix shows the
Q36: A firm making production plans believes
Q37: A firm making production plans believes
Q38: The following payoff matrix shows the
Q39: A firm is considering the decision
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents