SCENARIO 20-1
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature.

-Referring to Scenario 20-1,if the probability of S1 is 0.5,then the expected profit under certainty (EPUC )is
A)3
B)5
C)8
D)11

Question

SCENARIO 20-1
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature.

-Referring to Scenario 20-1,if the probability of S1 is 0.5,then the expected profit under certainty (EPUC )is
A)3 
B)5 
C)8 
D)11

Quizplus · Accepted Answer

The expected profit under certainty (EPUC) is calculated by taking the weighted average of the profits under each scenario, using the probabilities as weights. If the probability of S1 is 0.5, you would calculate the EPUC based on the given profits and probabilities, which results in 11.

SCENARIO 20-1 The Following Payoff Table Shows Profits Associated with a Set