Exhibit 21-5
Below you are given a payoff table involving three states of nature and three decision alternatives. The probability of occurrence of S 1 is 0.2 and the probability of occurrence of S 2 is 0.3.
-Refer to Exhibit 21-5. The recommended decision alternative based on the expected monetary value is
A)A
B)B
C)C
D)All alternatives are the same.

Question

Exhibit 21-5
Below you are given a payoff table involving three states of nature and three decision alternatives.  The probability of occurrence of S 1 is 0.2 and the probability of occurrence of S 2 is 0.3.
-Refer to Exhibit 21-5. The recommended decision alternative based on the expected monetary value is
A)A 
B)B 
C)C 
D)All alternatives are the same.

Quizplus · Accepted Answer

The expected monetary value (EMV) is calculated for each decision alternative, and the one with the highest EMV is recommended. Based on the information provided, alternative A has the highest EMV.

Exhibit 21-5 Below You Are Given a Payoff Table Involving Three States