Exhibit 21-3
Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of the occurrence of state of nature S 1 is 0.4.
-Refer to Exhibit 21-3. The recommended decision based on the expected monetary value criterion is
A)A
B)B
C)C
D)All alternatives are the same.

Question

Exhibit 21-3
Below you are given a payoff table involving two states of nature and three decision alternatives.  The probability of the occurrence of state of nature S 1 is 0.4.
-Refer to Exhibit 21-3. The recommended decision based on the expected monetary value criterion is
A)A 
B)B 
C)C 
D)All alternatives are the same.

Quizplus · Accepted Answer

The expected monetary value (EMV) criterion involves calculating the weighted average of all possible outcomes, with the weights being the probabilities of each outcome. Based on the information provided, option C has the highest EMV.

Exhibit 21-3 Below You Are Given a Payoff Table Involving Two States