The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows:
If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected value (per thousand "hits") of perfect information?
A) $3.40
B) $4.60
C) $8.00
D) $9.00
E) $10.00

Question

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: 
If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected value (per thousand "hits") of perfect information?
A) $3.40 
B) $4.60 
C) $8.00 
D) $9.00 
E) $10.00

Quizplus · Accepted Answer

The Answer of The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: 
If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected value (per thousand "hits") of perfect information?
A) $3.40 
B) $4.60 
C) $8.00 
D) $9.00 
E) $10.00

The Advertising Manager for Roadside Restaurants, Inc