The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:

If she feels there is a 30 percent chance that demand will be high, what is her expected value of perfect information?
A)$1,600
B)$1,100
C)$1,000
D)$900
E)$500

Question

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:

If she feels there is a 30 percent chance that demand will be high, what is her expected value of perfect information?
A)$1,600 
B)$1,100 
C)$1,000 
D)$900 
E)$500

Quizplus · Accepted Answer

The Answer of The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:

If she feels there is a 30 percent chance that demand will be high, what is her expected value of perfect information?
A)$1,600 
B)$1,100 
C)$1,000 
D)$900 
E)$500

The Owner of Tastee Cookies Needs to Decide Whether to Lease