A manufacturer of electrical machinery is located in a cramped, though low-rent, factory close to the center of a large city. The firm needs to expand, and it could do so in one of three ways: (1) remain where it is and install new equipment, (2) move to a suburban site in the same city, or (3) relocate in a different part of the country where labor is cheaper. Its decision will be influenced by the fact that one of the following will happen: (I) the government may introduce a program of equipment grants, (II) a new suburban highway may be built, or (III) the government may institute a policy of financial help to companies who move into regions of high unemployment. The value to the company of each combination is given in the following payoff matrix. If the manufacturer judges that there is a 60% probability that the government will go with option I, a 30% probability that they will go with option II, and a 10% probability that they will go with option III, what is the manufacturer's best option
A) Option 1
B) Option 3
C) Option 1 and Option 2
D) Option 2
E) Option 1 and Option 3
Correct Answer:
Verified
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